Vivendi SA investors have learned one lesson since Vincent Bollore began his reign: the chairman and largest shareholder does whatever he wants, with the strategic rationale seemingly grafted on afterwards for outside consumption.
His stake-building in Italian broadcaster Mediaset SpA is a case in point. Vivendi has bought 3.01 percent of the company, and means to continue buying until it owns anywhere from 10 to 20 percent. Bollore didn’t inform the family of Italy's former prime minister Silvio Berlusconi, whose Fininvest SpA holding company owns 41 percent of Mediaset.
Such bare-knuckle tactics are far from the spirit of the “strategic and industrial partnership” and share swap that Vivendi announced with Mediaset in April. That agreement descended into public sniping and a pending lawsuit after Vivendi decided it was overpaying for Mediaset’s loss-making pay-TV unit. The initial deal had the French company taking a 3.5 percent stake in Mediaset in exchange for buying the pay-TV bit known as Mediaset Premium for about 880 million euros ($934 million).
Now Bollore is donning his corporate raider hat, and just seeking to take what he wants. As Telecom Italia SpA and games-maker Ubisoft Entertainment SA can attest, the Breton billionaire is happy to buy shares to try to slowly take control of your company whether you like it or not.
Mediaset shares jumped as much as 26 percent on Tuesday, making up nearly all the losses they’ve suffered since Vivendi called off the deal in July. Call it the Bollore premium. The shares have support beyond their objectively weak earnings profile, given the French billionaire is a buyer.
And he won't be put off by a rising share price. The inflation of Ubisoft stock since Vivendi began its stalking hasn’t stopped Bollore buying more. Vivendi said last week it owned 25.15 percent of Ubisoft shares and 22.92 percent of voting rights, despite being at odds with the Guillemot family, which founded the games-maker and doesn't want a "partner".
The strategic rationale for Vivendi teaming up with Mediaset was always thin. Supposedly, it was to help it build a stronger position in Italy and Spain, as well as bringing production synergies to its pay-TV unit Canal Plus. Touting "similar Latin culture and roots," Vivendi said the pair would be a southern European challenger to Netflix Inc.
Bollore's end game may be a merger of Telecom Italia and Mediaset, a bit like AT&T and Time Warner Inc., or just getting them to work together more.
None of this is very convincing. Vivendi has only just finished selling off three telecom units after failing to find synergies between content and distribution. Why will it be easier with a grab bag of minority stakes? As for the Latin Netflix, Vivendi's talked about this for years with nothing to show for it.
Leaving aside the issue of the Berlusconi stake, if Vivendi really wanted to buy Mediaset it could afford it. The market value of the Italian company is 3.8 billion euros. Vivendi had 2.5 billion euros of net cash at the end of the third quarter, down from 6.4 billion euros at the end of last year. It has returned to the bond market this year, borrowing 2.1 billion euros since May.
But Bollore's Vivendi doesn’t want to buy Mediaset, just as it doesn’t want to buy Telecom Italia. He just wants control for the lowest price tag possible for reasons that are only ever entirely clear to him. If that means making some enemies along the way, even former prime ministers, Bollore doesn’t mind.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the author of this story:
Leila Abboud in Paris at email@example.com
To contact the editor responsible for this story:
James Boxell at firstname.lastname@example.org