Mediaset Surges as Berlusconi Said to Counter Vivendi Push

  • Vivendi buys 3% stake in Mediaset, may seek up to 20%
  • French foray follows failed deal, dispute over pay-TV unit

Former Italian Prime Minister Silvio Berlusconi isn’t waiting to counter rival billionaire Vincent Bollore’s hostile attempt to loosen his control over Mediaset SpA.

Berlusconi’s holding company Fininvest SpA may buy as much as 5 percent more of Italy’s largest commercial broadcaster, adding to its current holding of about 35 percent, according to people familiar with the matter. A stake that size would be valued at about 196 million euros ($208 million).

Mediaset rose the most in two decades after Vivendi said it acquired a 3 percent holding in the broadcaster and may seek as much as 20 percent. The unexpected advance, led by Vivendi Chairman Bollore, raised the stakes in a feud that erupted in July when plans for a southern European pay-TV venture failed. The thrust is considered hostile by Fininvest and follows the collapse of an agreement by Vivendi to buy Mediaset’s Premium pay-TV service in a share swap.

Fininvest on Tuesday received a 100 million-euro deposit related to the sale of soccer team AC Milan to a group of Chinese investors, according to another person, who asked not to be named because the information is private.

“We see Vivendi’s ultimate interest as controlling Mediaset in the same way as it (and Vincent Bollore) has done with a number of other assets, i.e. acquire a large minority stake and influence the strategic direction of the company,” Liberum said in a note to clients. “Mediaset is now likely to be seen as a potential bid target.”

Vivendi acted without informing Mediaset, which hired advisers and said it would continue fighting in court over the failed pay-TV deal. The stock purchase was seen by Mediaset as the start of a hostile bid, one that mirrors tactics activist investor Bollore has used before to exert influence over companies like Telecom Italia SpA and Ubisoft Entertainment SA.

Mediaset shares rose as much as 29 percent, the steepest advance since the company was listed on the stock exchange in 1996, and rose 27 percent to 3.5 euros at 3:56 p.m. in Milan. Vivendi rose 0.8 percent to 18.65 euros in Paris.

In a statement, Berlusconi’s Fininvest accused Vivendi of intentionally driving down the price of Mediaset. The companies have been at loggerheads since July, when Vivendi unexpectedly scrapped a plan to buy the Mediaset Premium unit in a share swap valued at about 880 million euros. That dispute is now tied up in court.

Those actions “were part of a specific pattern revealed with Tuesday’s move,” Fininvest said. “To create the conditions to artificially bring down the value of Mediaset and launch a discount purchase that looks like a real hostile takeover.”

Mediaset couldn’t be notified prior to the purchases for legal reasons, a spokesman for the the French company said. While the move was not solicited, it is not hostile, he said.

Supersedes Lawsuit

“Vivendi believes that the strategic interest of the industrial partnership announced on April 8, 2016, supersedes the stakes of the lawsuit,” Vivendi said in its statement.

Vivendi’s move on Mediaset may also have been influenced by 21st Century Fox Inc.’s bid for Sky Plc, which would mean Fox regaining ownership of Sky Italia and possibly heralding a more aggressive approach, Liberum said.

At Telecom Italia, Vivendi built a stake now at about 24 percent and gained board representation before engineering the ouster of former Chief Executive Officer Marco Patuano. Vivendi owns more than 25 percent of the capital of French video-game maker Ubisoft, where Bollore is playing an extended game of cat-and-mouse with the founding Guillemot family.

Bollore has gained a reputation for aggressive tactics, winning control of Havas SA a decade ago and video gamemaker Gameloft SE earlier this year. The latest moves in Italy are part of “the group’s intention to develop its activities in southern Europe and its strategic ambitions as a major international, European-based, media and content group,” Vivendi said.

In France, the CEO of Orange SA last week said he was interested in buying Vivendi’s pay-TV unit Canal Plus. People familiar with the matter said the companies are in talks for Orange, France’s largest phone company, to buy or form a partnership with Canal Plus.

Vivendi’s plan for Mediaset may include a Telecom Italia role, people familiar with the matter said in October. Bollore may want to make the former phone monopoly a preferred partner for Milan-based Mediaset’s pay-TV service and use its broadband network to promote the brand, with the option to buy in later, those people said. Vivendi said in early December it didn’t plan to involve Telecom Italia in a Mediaset deal.

— With assistance by Marie Mawad

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