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Elliot Goes For Board In Bid To Win Telecom Italia Vs Vivendi

By | 2018-07-11T03:28:36+00:00 July 11th, 2018|

Telecom Italia (TIM) may be bound for a change of leadership and direction after United States-based Elliott finally emerged victorious in its power struggle against Vivendi over “control” over TIM. The strategy: a crunch vote over board members, where Elliott did quite a surprising move to wrest control of TIM’s board during a shareholder meeting near Milan.

Numbers-wse, Elliott had just swept past Vivendi at 49.84-percent, with the latter only gaining 47.18-percent of shareholders votes. The vote for Elliott was the losing strike for the French telecoms giant, which is run by Vincent Bollore, also the largest TIM shareholder with a 24-percent stake.

TIM 2According to Elliott, the victory is for an “independent slate,” and can also be considered a win for the fund as a whole given it only held around nine-percent of overall TIM shares. Elliott has long since been pushing for a change over TIM’s top management, which is something evident after it demanded for six board members to be removed just last March.

The fund’s statement said the “victory” is a message for Italy and other countries that corporate governance with substandard performance is not to be tolerated by investors. After the victory, Elliot will now hold ten seats in the new restructured board, and Vivendi will only have the remaining five. This is a huge blow to the French conglomerate, as it had held a majority of shareholders vote before.

Vivendi immediately went for a counter-statement, saying that Elliot will not be ‘dismantling” TIM anytime soon. Simon Gillham, Vivendi’s communications head, said the strategy of Amos Genish will still be supported, and they remain the main shareholder even with only five board seats. Genish is both the general manager and director of TIM.

Meanwhile, Gillham noted that the victory Elliott achieved was not “market-driven,” and it was just thanks to Cassa Depositi e Prestiti, a state-controlled entity, that held 4.7-percent of the TIM stake. Gillham said the entity made a huge difference by “voting for a hedge fund” instead of Vivendi, a long-time shareholder.

It can be noted that Italy’s government had long since then criticized Vivendi’s management of TIM, and previous reports have noted there’s an obvious tension between the French group and Rome. In fact, Carlo Calenda, Economic Development Minister, said Vivendi is a “bad shareholder.” He added that while he is for foreign investment, he will not stay dormant when said investment “wants to destroy the value.”

Calenda’s gripe mirrors that of Elliott, which said TIM’s performance lowered since Vivendi’s involvement in the board last 2015. Part of said governance issues were “conflicts of interest,” like for instance when TIM had awarded an advertising contract to Vivendi-owned Havas last 2017.

 

 

 

 

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