Hedge Fund Boss Flies In for Vivendi Showdown

By Ruth Bender 

PARIS--U.S. hedge fund P. Schoenfeld Asset Management is on a mission to rally support from other Vivendi shareholders in its fight with the French group to obtain a higher dividend.

PSMA Chief Executive Peter Schoenfeld came to Paris Tuesday with one main message: Vivendi should share its war chest with shareholders.

"The amount of money in Vivendi's coffers is irrational," said Mr. Schoenfeld in a meeting with journalists. "There is one clear issue: the dividend is inadequate."

PSAM, which owns around 0.8% in Vivendi according to Mr. Schoenfeld, on Monday pressured Vivendi to use the cash pile amassed through recent asset sales to raise shareholder returns. PSAM submitted two resolutions for the group's annual meeting on April 17 demanding Vivendi return a total of EUR9 billion ($10 billion) in the form of a special dividend, over EUR3 billion more than the company has pledged to return to holders.

PSAM said Vivendi is undervalued because of its large cash stock and uncertainty over how the group plans to use its funds in the future and that it will try to convince as many shareholders as possible to support its case.

The task is a big one for PSAM.

PSAM is the first shareholder to challenge Vivendi since CSHYhairman Vincent Bolloré took over the reins of the group. Mr. Bolloré owns 8.2% of the company and became chairman last June, but he has given little information about how he sees the future of Vivendi.

With less than a month before the annual meeting and representing only a small amount of shareholders, analysts see little chance for PSAM to succeed in challenging Vivendi's chairman.

"We believe that it is highly unlikely that PSAM's approach is successful, as Bolloré undoubtedly had plans to reinvest the EUR14 billion cash balance to further ambitions in content and in Africa," said Conor O'Shea from Kepler Cheuvreux.

Vivendi has sold off assets that accounted for more than half of its revenue, including videogames maker Activision Blizzard and telecommunications companies in France and Morocco. But the group has provided little indication of what it plans to do with its cash and how it plans to develop the company in the future, frustrating some shareholders.

PSAM said it has three letters to Vivendi since 2013 with suggestions on how to improve the value of the company but hasn't received any response or met with management, Mr. Schoenfeld said.

"Shareholders deserve more information. If we leave them with all this leeway, they will never seek any sort of approval for any future plans with shareholders," Mr. Schoenfeld said. He said the big cash pile could tempt management to spend it unwisely.

Vivendi said Monday that PSAM had demanded the group sell Universal Music Group but that it rejected a dismantling of the company. No one at Vivendi was immediately available to comment on PSAM's latest comments.

Several other Vivendi shareholders, including Société Générale branch Lyxor Asset Management, declined to comment on PSAM's resolutions.

Write to Ruth Bender at [e-mail]

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