Vivendi Investors Shouldn’t Double Down with Bolloré
The attempt by Vivendi’s chairman to double his voting rights looks alarming
Vincent Bolloré is playing up to a stereotype.
The Vivendi chairman is under fire from activist investor Peter Schoenfeld, who wants the French company to pay a €9 billion ($9.9 billion) special dividend out of proceeds from asset sales, rather than hoarding cash for possible deals.
Given the lack of a clear vision for Vivendi’s future, active debate over how Vivendi should use its cash hoard has merit. Even investors willing to back Mr. Bolloré should welcome it. For while they might hope that everyone is in this together, Mr. Bolloré, also Vivendi’s largest shareholder, seems intent on tightening his grip.
Vivendi late Tuesday unsurprisingly asked shareholders to vote against Mr. Schoenfeld’s resolutions for its April meeting.
In theory, the law encourages long-term investing, limiting the influence of short-term speculators. In reality, it does no such thing. To qualify for double votes, investors must hold their stock in registered form, where effectively the shares are registered with and sometimes managed by the issuing company.
Even long-term institutional investors are reluctant to tie up their stock in this way: the shares must be converted into bearer form were they ever to be sold. The benefits, beyond not paying custodial fees, are dubious: For example, oil major Total’s website trumpets a “personal invitation” to shareholder meetings.
It is hard to avoid the conclusion that the rules merely tighten the grip of insiders and families who hold big stakes, or cement France’s network of supposedly strategic cross-shareholdings between its largest companies. And Vivendi is rare among France’s largest companies, particularly those without direct government involvement, in seeking to move from single to double voting.
From April 2016, two years after the law was adopted, Mr. Bolloré would get double votes on the 5% stake he has owned over that time, plus the votes on the 3% he bought recently after Vivendi’s stock fell sharply. That 3%, in turn, would quality for double votes after two years.
Mr. Bolloré’s Vivendi shareholding should align his interests with investors when it comes to his deal-making plans—especially in a market where valuations increasingly look stretched. Instead, by supporting double voting he casts himself as the billionaire industrial investor trying to grasp greater control.
That, if nothing else, should give all Vivendi shareholders pause for thought.