Vivendi Makes Peace With Minority Shareholder, Agrees to New Dividend

By Sam Schechner And Ruth Bender 

PARIS-- Vivendi SA said it will propose an additional dividend of EUR2 a share, boosting its cash return to shareholders as part of an agreement to quell a public spat with a minority shareholder ahead of the media conglomerate's annual meeting.

Vivendi and U.S. hedge fund P. Schoenfeld Asset Management LP said Wednesday that they have in recent days struck a deal to end their public feud, with Vivendi promising new dividends that will push Vivendi's overall cash return to shareholders to EUR6.75 billion ($7.3 billion).

In return, PSAM has agreed to withdraw two resolutions the company had proposed to force Vivendi to pay out EUR9 billion to shareholders, the two companies said.

The agreement puts an end to a battle that broke out last month, over what Vivendi should do with the roughly EUR10 billion it will have on its balance sheet when it completes a recent spate of recent asset sales. In the last two years, 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--leaving it focused on media.

The French group's chairman and single largest shareholder, Vincent Bolloré--who has a reputation in France for being a savvy investor but also tightly controlling companies he gets involved in--has said little about his plans, besides pledging to create more synergies between the units and building a France-based global media group.

In recent weeks, PSAM has said that Vivendi lacked a strategy, and should instead return cash to shareholders. On Wednesday, however, PSAM said it endorsed the company's growth strategy when combined with the new dividends.

"Mr. Bolloré has demonstrated his sensitivity and willingness to respond to shareholder concerns," the firm said in a statement.

As part of the deal Vivendi will propose the new dividend in a shareholder meeting after it completes all of its pending sales, including its telecommunications company in Brazil and its remaining stake in French telecommunications operator SFR.

If approved, it will be paid in two tranches, one in the fourth quarter of 2015 and the other in the first quarter of 2016.

Vivendi said it might consider returning more money to shareholders if its acquisition strategy requires less cash than anticipated over the next two years.

The truce after the three-week-long public quarrel that included a series of threats and counterthreats comes just a week before Vivendi's management was set to be challenged to respond to criticism from the U.S. fund in front of other shareholders at a general meeting in Paris.

The fund, run by Peter Schoenfeld, had argued that Vivendi is undervalued because of its large stockpile of cash and uncertainty over how the group plans to use its funds in the future. Mr. Schoenfeld said he would try to persuade as many shareholders as possible to support his case before the vote in April. It was unclear if he managed to rally much support.

Mr. Bolloré meanwhile has been gearing up for the meeting by boosting his stake in Vivendi from roughly 5% just before the fight became public to around 12% he controls today.

Vivendi, which owns French pay TV Canal Plus group and Universal Music Group, Wednesday also entered into exclusive talks with French telecommunications company Orange SA over a deal to buy 80% of video-streaming site Dailymotion. The company said the deal is a first step in its ambition to create a big global content company.

With the quarrel with PSAM resolved, Vivendi faces only one issue to resolve at its general meeting next month.

Separate to PSAM's demands, a group of minority holders submitted a resolution asking that Vivendi not apply a new French law that gives double voting rights to investors that have held shares for at least two years, a move designed to encourage long-term investments. Vivendi has called on shareholders to vote against the resolution.

Write to Sam Schechner at [e-mail] and Ruth Bender at [e-mail]

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