Groupe Bolloré Raises Stake in Vivendi -- 2nd Update

By Ruth Bender 

PARIS--French billionaire investor Vincent Bolloré boosted his stake in Vivendi SA for the third time in a month as a public quarrel with its shareholder P. Schoenfeld Asset Management LP heats up.

Groupe Bolloré, the conglomerate controlled by Mr. Bolloré, said Thursday it has increased its stake in Vivendi to 12.01% from 10.2% after spending another EUR568 million ($615 million) to buy more shares.

The move comes as Vivendi is under fire from PSAM, a U.S. hedge fund that wants the company to use funds from recent asset sales to boost shareholder returns. PSAM is trying to get backing from other shareholders for two resolutions it has proposed for Vivendi's general meeting later this month that would require Vivendi to pay shareholders a total of EUR9 billion.

Vivendi has been fighting back. The French owner of pay TV group Canal Plus and Universal Music Group argues that the hedge fund, which owns 0.8% in Vivendi, wants to dismantle the company and is urging shareholders not to vote for the resolutions.

In the spotlight is the multibillion euro cash pile that Vivendi has amassed after selling telecom and video game assets. Vivendi has dramatically slimmed down in recent years, leaving investors scratching their heads over what its new chairman plans to do with the cash to develop Vivendi into a European media group. But Mr. Bolloré has said little about his plans, sparking some criticism from investors.

Now Mr. Bolloré, who took over the chairmanship of Vivendi last June and is also the company's largest individual shareholder, is gearing up for what could be an intense general meeting in Paris on April 17. He has more than doubled his holding in Vivendi over the past month.

In a filing with France's stock market regulator AMF, Mr. Bolloré said he doesn't intend to take over Vivendi in the coming six months. The stake increase is a sign of confidence in Vivendi's capacity to develop, he said in the filing. The French investor, however, doesn't exclude proposing more members to Vivendi's board, he added.

Mr. Bolloré will be prompted to reply to the U.S. fund, controlled by Peter M. Schoenfeld, at the general meeting. PSAM has criticized Vivendi for not providing enough clarity on its strategy and said its chairman is benefiting from undervalued stock prices to boost its holding.

The fund has also argued that Vivendi could boost its share price by selling parts or all of Universal Music Group but has refuted Vivendi's claims that it was seeking to dismantle the company.

Vivendi in the meantime gained the backing from its employees in the fight with PSAM after warning that the fund could severely damage Vivendi with its push to "dismantle" the group.

"We are confident that our group can become an international player in media and content generating strong job creation through a long-term strategy," noted Paulo Cardoso, who represents Vivendi employees on the supervisory board, in a letter this week. "It is our duty to reject your proposal which is essentially nothing more than a holdup."

Mr. Schoenfeld on Thursday said it was too early to tell how much backing from shareholders he would get. "Let's say we're optimistic," Mr. Schoenfeld told France's Les Echos newspaper. "We don't understand why our initiative is stirring such a controversy. What we are proposing to Vivendi is a win-win deal."

Write to Ruth Bender at [e-mail]

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