(Recasts, adds analysts, details throughout)
MILAN, March 23 (Reuters) - Vivendi has succeeded
in shuffling the cards in a stand-off over Telecom Italia
with Elliott, rattling the activist fund by forcing
shareholders at the Italian phone operator to vote on an entire
But no clear indication of who is likely to end up calling
the shots at Italy's biggest phone group is likely to emerge for
at least a couple of weeks.
Eight Telecom Italia (TIM) board members nominated by
Vivendi, its top investor, resigned on Thursday, setting off a
full board renewal. Shareholders will vote on the matter on May
The move is seen as a bid to pre-empt attempts by Elliott,
which has built a potential 5.74 percent stake in TIM, to
challenge the way Vivendi runs the group.
Elliott slammed the maneuver as "cynical and self-serving".
"The board has simply abandoned their posts to stall for
time," Elliott said in a statement, adding that this did not
come as a surprise given "the momentum behind Elliott's campaign
at Telecom Italia to improve both performance and governance".
Vivendi had no comment on Elliott's statement.
Earlier this month, Paul Singer's fund had called for six
Vivendi-nominated board members, including TIM Chairman and
Vivendi CEO Arnaud de Puyfontaine, to be replaced to improve
governance and strategy at the former state phone monopoly.
Some analysts said Vivendi's action showed the French group,
which owns 24 percent of TIM, took Elliott's threat seriously.
"We believe that Elliott (and supporters) remain well-placed
to ensure that Telecom Italia's board post-May 4 will not be
Vivendi-controlled," Jefferies said in a note.
The Italian phone incumbent has lost more than a third of
its market value since Vivendi first took a stake in mid-2015.
Vivendi eventually appointed two-thirds of its board and
named its own chief executive as TIM executive chairman, raising
concerns among other shareholders and politicians in Rome who
consider the company of strategic national importance.
DRIVING A WEDGE?
Shareholders have until April 9 to present their slates.
The one winning the most votes will secure two-thirds of the
board while the remaining directors will be appointed from the
Vivendi's move is seen as a way of driving a wedge between
Elliott and institutional investors, who now have to choose
whether to back the activist fund, to follow Vivendi or whether
to present slates of their own.
TIM Chief Executive Amos Genish, whose new three-year
strategy was well received by investors, will likely feature in
Vivendi's list, a fact that might help win support for the
Vivendi is effectively shifting the focus away from
governance issues by asking shareholders to support Genish's
strategy plan, said Berenberg analyst Nicolas Didio.
With its 24 percent stake, Vivendi can ensure it will gain
at least some representation on the board rather than lose all
seats "which might have happened had the vote only been about
replacing six directors", Didio added.
Elliott has written to other shareholders calling for a
"truly independent" board saying that "poor stewardship" under
Vivendi had depressed TIM's value and led to "deeply troubling
corporate governance issues".
Some institutional investors have expressed concern over
Vivendi's leadership, especially after two CEOs quit in less
than two years. But most also approve of Genish, despite him
being an ally of Vivendi Chairman Vincent Bollore, because of
his track record as a telecoms veteran and dealmaker in Brazil.
Whether TIM will end up with a more independent board will
depend on each side's next moves, the candidates they propose
and shareholder attendance at the meeting in May, analysts said.
Shares in TIM closed down 1 percent at 0.77 euros against a
0.5 percent drop in Italy's blue-chip index.
(Reporting by Agnieszka Flak, Valentina Za and Maria Pia
Editing by David Goodman and Keith Weir)
First Published: 2018-03-23 10:33:09
Updated 2018-03-23 22:42:23
© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.