December 22, 2016    3 minute read

Vivendi: What Lies Beneath The Aggressive Acquisition Strategy

Takeover Tactics    December 22, 2016    3 minute read

Vivendi: What Lies Beneath The Aggressive Acquisition Strategy

Over the last week in Italy financial and non-financial papers have written extensively about the hostile takeover of Mediaset by Vivendi, an Italian media and television company. But what does one actually know about Vivendi?

Vivendi is a huge French multinational mass media company based in Paris. It has invested in many different industries across its history like television, movies, video games and telecommunications. The French-based company has as its main shareholder with 30% voting rights Group Bollorè, which is managed by the French billionaire Vincent Bollorè.

For the last quarter (ended on September 30th, 2016), Vivendi reported an astonishing €10.86bn in revenues (trailing twelve months) and an EBITDA of €845m.  Due to its extensive economic and financial power, Vivendi was able, throughout its history, to perform many M&As in different industries, some of which have not been that friendly. Some examples are: Gameloft (bought 96% of the company), Ubisoft (25.15%), Telecom Italia (24.6%), Mediobanca (8%) and the latest one is Mediaset (25.7%)

Clash Of The Titans

As a matter of fact, after a failed agreement in the summer, when the company led by Vincent Bollorè was supposed to buy a 100% stake in Mediaset Premium (digital terrestrial service provided by Mediaset), the two companies ended up in court after Mediaset sued Vivendi. It seemed that the two companies were not going to do business together, at least until December 13th, when Vivendi decided to become one of the major shareholders of Mediaset, growing its stake from 3% to almost the 30% in about a week.

Fininvest, a company controlled by the Berlusconi family and Mediaset main shareholder, tried to protect itself against the takeover by increasing its stake to 39.775%.

The intention of Bollorè is probably to make a deal from a much stronger position, while Fininvest is taking time with its legal team in order to find a solution, that, accordingly to some experts, could involve the acquisition of some put & call, in order to increase Fininvest’s stake to 5% over the next few months.

Political Consequences

The importance of Mediaset in the Italian economy and the fact that this company is owned by the former prime minister Silvio Berlusconi and still active in politics shifted the discussion from the financial markets to the political arena.

As a matter of fact, on the one hand, Lorenzo Guerini deputy secretary of the ruling centre-left Democratic party said that:

 “The government would have to explore actions to ensure the safety of an Italian asset”.

On the other hand, the exponents of the anti-establishment Five-Star Movement said that, in their opinion, a state intervention would be “completely inappropriate” as Mediaset is not a strategic asset for Italy or at least it is less strategic than Telecom, of which Vivendi became freely the major shareholder in June 2015.

The question now is what is going to happen in the future to Mediaset the answer right now is far from clear, but in the next months, the strategy of Vivendi and Fininvest will become more apparent.

In addition, it is going to be interesting to see how this situation affects the Italian political class, which is in the middle of post-referendum discussions and the rescue of Monte dei Paschi di Siena.

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