Vivendi SA rebuffed U.S. hedge fund P Schoenfeld Asset Management’s call for a spin off its Universal Music Group Unit, though the Paris-listed group indicated it will examine a proposal for a higher dividend.
According to reports, PSAM is preparing resolutions for Vivendi’s annual general meeting next month urging Vivendi to initiate actions to enhance its share price.
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Vincent Bollore facing challenge from PSAM
French financier Vincent Bollore, who chairs Vivendi, is facing a challenge to his strategy for the media giant from the New York-based hedge fund, P Schoenfeld Asset Management. The dissident shareholder is concerned about Bollore’s outsize influence at the Paris-based Vivendi.
The Paris-based media giant Vivendi’s proceeds from selling over $30 billion of assets to refocus to media from telecommunications has sparked questions about how the company plans to spend its money. Vivendi, led by shareholder and chairman Vincent Bollore, has unveiled plans to return about $6.4 billion to investors and has said it’s seeking acquisitions to build a European media and content company.
Last month, Vivendi indicated that it expected to return €5.7bn in the form of buybacks and dividends to shareholders by mid-2017, which includes €1.3bn in distributions in 2014. Interestingly, the deadline for submitting annual meeting resolutions is March 23, and PSAM may yet to decide to hold off, particularly if other shareholders emerge with similar plans.
According to Vivendi, PSAM “appears to be submitting new requests” today, including calls for a higher dividend. The media giant said it will study the proposal.
Vivendi rebuffs Universal Music spinoff
In a statement Monday, Vivendi also rebuffed a December suggestion by PSAM for Vivendi to spin off its Universal Music Group Unit.
Last week, Vivendi dismissed a report in the New York Post that U.S. billionaire John Malone had offered to buy UMG, the world’s largest music company by revenues, through his Liberty Media group.
Vincent Bollore has built a stake of over 8% in Vivendi over the past three years. His stake is set to increase further, thanks to a new law passed last year by the French government that grants double voting rights to investors who have held nominative shares for at least two years, unless shareholders decide otherwise in a general meeting. However, the media giant is not planning to pass a resolution that would keep the principle of “one share one vote” on April 17, when it is holding its annual meeting. These developments would automatically enhance Bollore’s voting rights.
Citing people familiar with the development, Financial Times reports PSAM has hired advisers in New York and Paris to plan a proxy fight after becoming disillusioned with Vivendi’s share price performance. PSAM, run by Peter Schoenfeld, owns a little less than 1% of Vivendi stock.
Last month, ValueWalk published a detailed article discussing Bollore’s complex corporate structure. Providing a rationale for its long position in Bollore, Muddy Waters highlighted that Mr. Bollore is an outstanding capital allocator, and has grown the share price and book value of Bollore over the past 20 years, respectively, by 1,213% and 1,953%.