Vivendi Said Open to Sell Telecom Italia to Pursue Mediaset

  • Sale of 24% stake would clear way for authorities’ green light
  • Bollore’s main goal is creating a European media power

Vivendi SA is open to selling its 24 percent stake in Telecom Italia SpA to facilitate its plan to form a European media champion that would include Italy’s Mediaset SpA, according to people familiar with the matter.

Selling the Telecom Italia holding, valued at about 3.03 billion euros ($3.23 billion), would ease Italian regulators’ concerns over the French media company’s influence in the country, said the people, who asked not to be identified citing private talks.

Vivendi’s immediate goal is to forge a tie with Silvio Berlusconi’s Mediaset, a deal that could take the form of a share-swap or even outright purchase of the Italian broadcaster, the people said. Bloomberg News reported this month that French billionaire Vincent Bollore, who leads Vivendi, is considering offering a stake in Vivendi to the Berlusconi family to resolve their dispute over a pay-TV deal that went sour last year.

Telecom Italia had no comment. A Vivendi spokesman said it wasn’t in the company’s intention to sell and that the French company is a long-term shareholder of the Italian carrier.

Vivendi’s plan is at an early stage, the people said, and could change. Bollore needs to resolve the differences with Mediaset before proceeding with its expansion plan in southern Europe. Paris-based Vivendi still isn’t speaking directly with Mediaset and the two companies are fighting in court over Vivendi’s aborted plan to purchase Mediaset’s Premium pay-TV channel.

Telecom Italia shares pared gains of as much as 3.3 percent to close 1.1 percent up to 0.84 euro. Mediaset closed 1.6 percent higher to 4.28 euros in Milan, after earlier declines of as much as 3.1 percent. Vivendi rose 0.4 percent in Paris.

The original agreement, reached in April 2016, included a share swap that would have given Mediaset and Vivendi 3.5 percent of the other’s stock. Three months later, Vivendi unexpectedly pulled out, and the sides have been trading accusations ever since.

In December, Vivendi built up a stake of almost 30 percent in Mediaset. Italy’s communications regulator said that month that Vivendi’s control of both Mediaset and Telecom Italia would violate the country’s competition rules.

Billionaire Friends

Berlusconi, Mediaset’s founder, and Bollore, 64, were friends before their dispute went public. While the relationship has frayed, both companies face similar challenges: competition from online TV providers like Amazon.com and Netflix Inc., and from Sky Plc, which is expanding as it gets absorbed into Rupert Murdoch’s U.S. media empire. That creates incentives on both sides to resolve their differences.

While one option involves absorbing Mediaset into Vivendi, Berlusconi -- the 80-year old former Italian premier -- may be reluctant to cede control of his media empire before the next national elections, the people said. Those elections could come as soon as this year.

Vivendi built its stake in Telecom Italia during the fourth quarter of 2015. Bollore, an activist investor, gained board representation and engineered the ouster of the carrier’s former CEO, Marco Patuano. Telecom Italia shares fell 29 percent last year.

One potential buyer for the Telecom Italia stake is Orange SA, the people said, but the French carrier has denied several times that it’s planning a move. A representative for Orange repeated that position on Thursday.

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