Backlash at Vivendi buyback vote that could boost Bolloré’s stake
Proxy adviser and activist warn against proposal
Vivendi shareholders will vote on Monday on a massive buyback plan that could allow Vincent Bolloré’s family holding company to take greater control of the media conglomerate, angering some investors.
A corporate governance specialist and a prominent activist investor have urged shareholders to vote against a resolution authorising a 25 per cent reduction in the company’s share capital, a proposal that Vivendi unveiled in February alongside its full-year results.
The Bolloré Group, the industrialist’s family holding company, already holds 28.51 per cent of the voting rights in Vivendi, whose assets include Universal Music Group, advertising company Havas, and video games publisher Gameloft.
“It is not in the interests of minority shareholders to authorise such a transaction,” said Loïc Dessaint, chief executive officer of Proxinvest, which provides proxy voting research for investors. “The problem is that it’s a way for Bolloré Group to control the company without launching a full takeover. The tactics of the Bolloré Group is always to try to take full control without paying the price.”
Vivendi did not respond to a request for comment.
Reducing the overall number of outstanding shares in Vivendi would mean that the Bolloré Group passively crossed the threshold of 30 per cent of the voting rights, which normally means that a company must make a mandatory takeover bid. However the Bolloré Group could ask the French markets regulator, the AMF, to waive this obligation. It was granted a similar waiver at Havas in 2012, when the AMF allowed the Bolloré Group to cross the 30 per cent threshold without making a full bid.
“This is classic Bolloré,” said Peter Schoenfeld, an activist investor who holds shares through his P. Schoenfeld Asset Management vehicle and has previously clashed with Mr Bolloré. “Every time he uses the same playbook. He could soon own more than 30 per cent of Vivendi without paying a premium.”
Mr Schoenfeld added: “If the Vivendi board wants to distribute cash they should do so through dividends and protect the rights of the existing majority. Shareholders should vote down the public offer unless Bolloré Group agrees to tender along with the public.”
However, the resolution proposes a maximum price for a buyback of €25 per share. On Friday Vivendi’s share price closed at €26.28. The buyback proposal boosted Vivendi’s share price when it was announced in February. “A share buyback at up to €25 is a clever way of creating a glass floor on Vivendi’s share price,” said Tom Singlehurst, an analyst at Citi.
At Vivendi’s annual general meeting on Monday investors will also be asked to vote for the appointment of Cyrille Bolloré to replace this father, Vincent Bolloré, on the group’s supervisory board. This would mark the latest step in succession planning by the elder Mr Bolloré. At Vivendi’s AGM last year he stepped down as its chairman and was replaced as chairman by another of his sons, Yannick Bolloré. A month earlier the elder Mr Bolloré was placed under formal investigation related to the alleged bribery of foreign officials in Africa. He has denied any wrongdoing.
In March, 33-year-old Cyrille Bolloré was named chief executive and chairman of the Bolloré Group. Proxinvest is recommending to investors that they oppose the appointment of Cyrille Bolloré to Vivendi’s supervisory board, citing concerns about board independence and his time commitments.
Vivendi’s AGM on Monday comes as the group is preparing to sell a stake in Universal, the company’s main profit engine, which banks are valuing up to $42bn. Citi’s Mr Singlehurst said: “Corporate governance concerns have moved into the background because right now the interests of the Bolloré family shareholders in Vivendi are fully aligned with the non-Bolloré family shareholders: it’s all about maximising the value of the UMG stake sale.” He added: “But I’m sceptical about the valuation of UMG and how long these shareholder interests will be aligned.”