Vivendi Investors Should Reject Activist’s Proposal, ISS Says

Vivendi SA investors should vote against a proposal by activist shareholder P. Schoenfeld Asset Management LP for a dividend of about $10 billion by the French media company, Institutional Shareholders Services recommended.

The investor-advisory service, based in Rockville, Maryland, said PSAM’s proposal “gives too little credit” to Vivendi’s recent performance and its new management team under Chairman Vincent Bollore with regard to capital allocation.

Schoenfeld, whose firm owns 0.8 percent of Vivendi, is asking that the Paris-based company pays 9 billion euros ($9.8 billion) in 2015 dividends, more than the 5.7 billion euros Vivendi has said it will return by mid-2017 through a combination of dividends and share buybacks. Shareholders are set to vote on the proposal at an April 17 meeting.

“At this time the company has demonstrated sufficiently prudent regard for shareholder assets in that a vote against the PSAM dividend proposals is warranted,” ISS said in a report delivered to Vivendi shareholders Thursday.

Bollore is at the center of questions about how Vivendi plans to spend its cash pile after disposing of more than $30 billion of telecommunications assets to refocus on media.

ISS said Vivendi’s board acted “opportunistically and yet with discipline” by selling assets at a time when valuations were at a five-year high and not purchasing anything in return.

The group also said Bollore may not be “everyone’s cup of tea, as reflected by the 25 percent opposition to his election to the Vivendi board in 2013” and that his disclosure practices are below market standards. Bollore today reported an increase in his Vivendi stake to 12 percent, the second boost within a week amid the clash with PSAM.

“Shareholders will want to continue monitoring the board’s capital allocation closely, given the size of the cash balance and the concomitant risk if the board’s diligence falters,” ISS said.

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