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Vivendi hits back after hedge fund move

The Vivendi office is seen in Paris on Wednesday, May 17, 2006.Vivendi has hit back following an attack on its strategy by hedge fund P. Schoenfeld Asset Management demanding that it return €9 billion in cash to shareholders as a special dividend, a move first reported by the Financial Times

The hedge fund, which holds under 1% of Vivendi’s stock, said that the company was undervalued due to its significant cash holdings and an inadequate capital return policy. The group said it had submitted a paper to Vivendi’s management board arguing that the company should be value at between €25-€27.50 a share.

Vivendi said it had received note from the hedge fund in December demanding the sale of Universal Music Group (UMG), seen by the company as one of the two pillars of its core media strategy alongside Canal+. Vivendi noted that its president, Arnaud de Puyfontaine, had stated on a number of occasions that UMG is not for sale.

Vivendi said that the majority of shareholders that had been briefed by the company’s management supported an ambitious medium-term strategy, based on media and aimed at creating value.

Vivendi said it had committed to return €5.7 billion to shareholders through a €1 dividend over three years and a share buyback programme potentially reaching €2.7 billion.

Vivendi’s management condemned the hedge fund’s moves to initiate the dismantling of the group and reaffirmed its ambition to create a global content and media business.