Vivendi Boosts Telecom Italia Stake Further to Almost 20%

  • Move gives Bollore more room to drive company strategy
  • Vivendi values stake at $3.4 billion, or 1.14 euros per share

Vivendi SA increased its stake in Telecom Italia SpA for the second time in a month, giving French billionaire Vincent Bollore more clout in shaping the carrier’s strategy and negotiating deals to distribute the French media company’s offerings in southern Europe.

Paris-based Vivendi raised its holding to 19.88 percent on Oct. 5, from 15.5 percent, according to a filing with the U.S. Securities and Exchange Commission. Vivendi bought the additional Telecom Italia shares on the market and the entire stake is valued at 3.05 billion euros ($3.4 billion), based on 1.14 euros per common share., it said on Tuesday. The stock was little changed at 1.07 euros at 12:15 p.m. in Milan.

Vivendi is executing a plan to create a media group with a distinct focus on southern Europe, built around its French pay-TV station Canal Plus and collaboration with carriers to distribute TV series and movies. Bollore also views Telecom Italia as a financial investment and he would ultimately want to influence its strategy and initiate changes, according to people familiar with his plans. A Vivendi representative declined to comment.

Last year Italy lowered the threshold for a mandatory takeover offer to 25 percent from 30 percent for companies with a market capitalization of more than 500 million euros and revenue above 300 million euros in an effort to protect minority shareholders and to discourage investors who aren’t committed to a long-term industrial plan.

"We would not be surprised if the group edges up its stake a bit further," Natixis analysts Jerome Bodin and Pavel Govciyan wrote in a note. The stake "should enable Vivendi to impose itself at the heart of the telecoms market arena in the next few months."

Vivendi agreed to take on the initial Telecom Italia stake as part of the August 2014 deal to sell its Brazilian broadband business GVT to Telefonica SA, then an investor in Telecom Italia. Vivendi said based on Telecom Italia’s share price of 0.86 euro before the GVT agreement, the subsequent price increase resulted in a gain of more than 200 million euros for the French company.

Under Bollore, Vivendi is looking for deals to transform the media group to take on Google Inc. and Apple Inc. as well as traditional rivals such as Sky Plc. Vivendi has accumulated 9 billion euros in cash after disposing of telecommunications assets in countries including France and Brazil. It owns Universal Music Group and has a minority stake in video-game company Activision Blizzard Inc.

“Rome was not built in a day," Chief Executive Officer Arnaud De Puyfontaine said Sept. 7 of Vivendi’s investment in Telecom Italia. “When you got a big plan you have different steps and it’s not by the snap of your fingers that you do that."

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