The man trying to force Vivendi to spin-off Universal Music Group into an independent entity has received a slap on the wrist by the French conglomerate – in the shape of a public warning over the legality of his tactics.
Last week, Peter Schoenfeld – the boss of US Hedge Fund group PSAM – upped his attempts to force Vivendi to pay out €9bn in cash reserves to shareholders in a special dividend.
In addition to this pay-out, he is calling for an overhaul of Vivendi’s structure which would include spinning out Universal Music Group into an ‘independent’ entity, directly answerable to its shareholders.
He has provided a presentation to fellow investors to encourage them to back his plan at Vivendi’s annual shareholder meeting next month.
“We would be forced to promptly bring legal action against you… the damages could amount to €9bn.”
However, in a move clearly designed to scare Schoenfeld from generating more shareholder support for his plan, Vivendi has warned him that French law could land him in hot water.
Due to Vivendi’s ownership of French TV channel Canal+, it must abide by local legality which prevents foreign nationals from outside the EU owning more than 20% of a company with a television licence.
“In so far as it would appear that your direct or indirect share ownership, together with that of third parties with whom you might join forces, could surpass the 20% threshold, this could be seriously prejudicial to the company,” Vivendi warned Schoenfeld in an open letter reported by the FT.
It added: “We would be forced to promptly bring legal action against you to seek joint and several damages. The damages, according to a preliminary analysis of our expert consultant, resulting from the harm that would be created by your actions, could amount to between €5bn and €9bn.”
There may or may not be some deliberate irony in the fact that €9bn is the exact amount of cash that Schoenfeld is attempting to extract out of Vivendi for himself and fellow investors.
“The purpose of vivendi’s letter seems to be to intimidate us… we consider this totally unacceptable.”
PSAM responded that it felt that the “purpose of Vivendi’s letter seems to be to intimidate us… we consider this behaviour totally unacceptable.”
Meanwhile, Vivendi’s biggest shareholder, Vincent Bolloré, has bought an extra 27.7m shares in the company for €632m.
In a move that appears to be an attempt to increase control over Vivendi’s future direction in the face of PSAM’s protest, Bolloré has now pushed his ownership to 10.2% – double what it was in February.
Before its UMG spin-out demand, PSAM’s initial course of action, in December 2014, was to propose that the music company be sold to another party.
Arnaud de Puyfontaine, Chairman of Vivendi’s Management Board, publicly responded that UMG would be sold “over my dead body”.
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