November 21, 2019 / 5:58 PM / 9 months ago

Vivendi ready to sell part of Mediaset stake at a loss to end legal row: sources

MILAN (Reuters) - French media group Vivendi (VIV.PA) is prepared to sell part of its stake in Mediaset (MS.MI) at a loss in an attempt to reach a deal to end years of bitter legal disputes with the Italian broadcaster, two sources close to the matter said on Thursday.

A man stands as a woman walks past a sign of Vivendi at the main entrance of the entertainment-to-telecoms conglomerate headquarters in Paris, France, November 21, 2019. REUTERS/Gonzalo Fuentes

One of the sources said that in order “to show its goodwill” Vivendi was prepared to sell the Mediaset shares held by its Simon Fiduciaria trustee at a price of 3.25 euros each.

That compares with the 3.7 euros per share paid by Vivendi in 2016 to build its 29% stake, which Mediaset considers hostile.

Vivendi, which is also a leading investor in Italy’s former phone monopoly Telecom Italia (TLIT.MI), holds a 20% stake in Mediaset through Simon Fiduciaria to comply with a ruling by Italy’s telecoms watchdog.

The sources said Vivendi would sell all the shares held by Simon Fiduciaria.

Vivendi has challenged in court a plan by Mediaset to fold Mediaset’s domestic and Spanish businesses under a Dutch holding company to pursue pan-European alliances.

Mediaset had offered to repurchase shares held by investors who wanted to opt out of the proposed corporate overhaul at 2.77 euros, a price deemed too low at the time by Vivendi.

As part of recent attempts to reach a settlement, Mediaset had offered to buy back the shares held by Vivendi at that same price, potentially with help from other investors.

The price of 3.25 euros a share stands halfway between what Vivendi originally paid and the withdrawal price offered by Mediaset.

One of the two sources said Vivendi hoped to reach an accord by Friday’s deadline. But a third source said Mediaset could face problems from shareholders who have opted out if it paid Vivendi a higher price than that they accepted.

Mediaset’s corporate reorganisation was put on hold last month by a Spanish court, following a request by Vivendi.

The French group has filed a similar request in Italy and a Milan court this month gave the two parties until Friday to seek to reach an accord. A hearing is scheduled in Milan on Friday.

A Mediaset source said the broadcaster would hold a board meeting on Friday ahead of the hearing and commit to amend in part the by-laws of the new Dutch holding company in accordance with indications previously received from the court.

Sources have told Reuters the two sides were struggling to hammer out a compromise.

Failure to end the stalemate would likely complicate the pan-European project by Mediaset, which is controlled by the family of former Italian Prime Minister Silvio Berlusconi.

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It would also keep both companies locked in a protracted legal dispute which analysts say is distracting them from efforts to tackle increasing industry competition from streaming services like Netflix (NFLX.O) and Amazon Prime (AMZN.O).

Vivendi and Mediaset have been at odds since the French conglomerate in 2016 pulled out of an 800 million euro ($885 million) agreement to buy Mediaset’s loss-making pay-TV unit.

Shares in Mediaset closed up 0.4% at 2.681 euros on Thursday.

Reporting by Elvira Pollina in Milan and Gwenaelle Barzic in Paris; Editing by Valentina Za, Susan Fenton and Daniel Wallis

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