Elliott Scores a Victory in Telecom Italia Fight

By Eric Sylvers 

Milan -- Elliott Management Corp., the American activist fund, Friday grabbed control of Telecom Italia's board as the monthslong fight over Italy's dominant phone company reached a crescendo.

In a shareholder vote over competing slates of directors, Elliott narrowly edged out French media conglomerate Vivendi. That gave Elliott the right to name 10 of Telecom Italia's 15 new board members with Vivendi naming the rest.

Elliott's victory is a stinging defeat for Vivendi, which owns almost a quarter of Telecom Italia and is the phone operator's biggest shareholder. Elliott owns 8.8% of Telecom Italia.

Imposing its list of directors on Telecom Italia is the latest triumph for Elliott, which has been making life difficult for companies across Europe. The fund has inserted itself in various other European corporate battles including at British TV giant Sky PLC and at Akzo Nobel NV. Though not always successful, the fund has usually managed to get some of its demands met.

The battle for Telecom Italia heated up in March when Elliott announced it had acquired 3% of the phone company and sent a letter to the other shareholders proposing the ouster of several directors including the chairman. The fund has also called for the company to sell or spin off some businesses and to begin paying a dividend on common shares after a five-year hiatus.

Elliott's aggressive moves, still relatively rare in Italy, shown a light on the country's record in corporate governance, where large companies can be controlled with minority stakes. The fight struck a nerve with many Italians who on the one hand have little experience with activist funds and on the other have looked askance at French companies that have crossed the Alps to make acquisitions.

"Today's win...sends a powerful signal to Italy and beyond that engaged investors will not accept substandard corporate governance," Elliott said in a statement following the vote.

Vivendi has been critical of the plan Elliott outlined for Telecom Italia, calling it short sighted and aimed at milking quick profits out of the company to the detriment of its long-term health.

In a sign that the battle is far from over, Vivendi said it remained committed to Telecom Italia "and will take all measures necessary to preserve its value and avoid its dismantling."

Elliott won by the slimmest of margins, with its slate of directors gaining 49.8% of the votes among shareholders to Vivendi's 47.2%. About two-thirds of shares were voted, extremely high for an Italian shareholders' meeting.

The list of board members put forward by Elliott is a who's who of the Italian corporate world and includes Alfredo Altavilla, a top executive at Fiat Chrysler Automobiles NV tipped as a possible future chief executive of the Italian-American car maker, and Fulvio Conti, a former CEO of energy giant Enel SpA.

Vivendi's five newly elected Telecom Italia board members include Arnaud de Puyfontaine, Vivendi's CEO, and Amos Genish, Telecom Italia's outgoing general manager.

Write to Eric Sylvers at [e-mail]

(END) Dow Jones Newswires

May 04, 2018 12:17 ET (16:17 GMT)

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