Telecom Italia last month proposed to convert savings shares to ordinary shares at a price of one savings share plus 9.5 euro cents in cash for each savings share acquired, which the would simplify the capital structure of the company and increase the free float and liquidity of the ordinary shares. The plan, if carried through, would see Vivendi’s stake in the Italian telco diluted from 20.1% to about 13.9%.
The French media giant noted that “the absence of a fairness opinion with respect to the holders of ordinary shares, who would be significantly diluted in this transaction” and questioned the fairness of the proposed conversion ratio and said that it was “not convinced that the cash payment of 9.5 euro cents required to convert a saving share into an ordinary share is fully justified”.
Vivendi also said that it believed that “the decision to propose a savings shares conversion plan should rest with a Board of Directors that best represents the current shareholders of Telecom Italia” and that “it does not feel that there is any urgency to implementing such a transaction”.
Vivendi has previously proposed that the size of the Telecom Italia board should be increased from 13 to 17, with the addition of four names proposed by it – Vivendi CEO Arnaud de Puyfontaine, COO Stephane Roussel, CFO Hervé Philippe and consultant Felicité Herzog. However, this proposal is also likely to be rejected as it is opposed by key institutional investors.
Telecom Italia responded by defending the plan, arguing that it was proposed by the board to pursue the interests of the company and all shareholders and that there were many recent precedents. The company said that its board had “deemed it advisable to finalize the conversion proposal, which had been thoroughly considered in recent months, in a market situation that appeared particularly favourable” and said that the proposal “which the market had prompted for some time, was met with widespread appreciation from financial analysts, as confirmed by the performance of the shares on the stock market”.
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