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Mediaset Vivendi battle reignites in dispute over shareholder meeting

Mediaset has defended its decision to exclude Simon Fiduciaria, the company in which Vivendi placed the bulk of its shares in Italian broadcaster Mediaset to meet regulatory demands that it reduce its participation in the company, from a shareholders’ meeting in June, following a legal move by Simon to assert its rights as a shareholder.

Mediaset said that the decision to exclude Simon was justified by Vivendi’s refusal to honour the commitments made in its aborted 2016 agreement to purchase Mediaset’s pay TV unit and by regulator AGCOM’s ruling that Vivendi had breached the the country’s Testo Unico dei Servizi di Media Audiovisivi e Radiofonici (TUSMAR) rules whereby companies with a market share in excess of 40% cannot control more than 10% of a Sistema Integrato delle Comunicazioni (SIC) – meaning a large TV, radio and publishing outfit, such as Mediaset.

Mediaset also cited its legal case against Vivendi for “a long series” of unlawful moves including the violation of an agreement not to purchase Mediaset shares or interfere with Mediaset’s governance ahead of the sale of Mediaset Premium. It also cited EC and Italian regulatory decisions confirming that Vivendi de facto controlled Telecom Italia.

The crux of Mediaset’s case is that Vivendi’s acquisition of shares was in breach of agreements signed between the pair as well as the TUSMAR rules and that “the aforementioned violations remain despite the fiduciary registration to Simon Fiduciaria” of the bulk of Vivendi’s stake.

Simon Fiduciaria, which holds a 19.19% stake in Mediaset – leaving Vivendi with a 10% holding – has demanded the annulation, through a Milan court, of a proposal for a medium and long-term incentive and long-term incentive plan and authorisation of the board of directors to purchase and sell treasury shares to support stock options and other share-based incentive plans. The company has also called on the court to ascertain and declare its right to particulate in shareholders meeting and to exercise all administrative rights inherent in the shares it holds.

Mediaset has now doubled down on what it sees as a move orchestrated by Vivendi by saying it will “follow the same procedure” in assessing whether Simon or Vivendi can participate in its upcoming shareholders’ meeting.

The application of Italy’s TUSMAR regulations meant that Vivendi, as the biggest single shareholder in Telecom Italia, with a stake deemed to mean it exercised effective control over the telco, could not simultaneously hold a large stake in Mediaset, according to an AGCOM ruling last year

Vivendi subsequently moved to transfer its holding above the 10% threshold to a blind trust, while at the same time contesting the AGCOM ruling.

While AGCOM has never formally accepted that Vivendi’s transfer of its shares to Simon constituted a solution, the regulator recently ruled that it no longer exercised a controlling influence over Telecom Italia, leaving a potential opening for Vivendi to make a stronger case that it is not in breach of the TUSMAR regulations.