MILAN (Reuters) - Italian broadcaster Mediaset’s (MS.MI) plan to reorganize its businesses as part of a pan-European growth strategy is set to be approved by shareholders on Wednesday, despite opposition from the group’s second biggest investor, Vivendi (VIV.PA).
But the French media group could still throw a spanner in the works if it decides to sell its Mediaset stake - as the corporate overhaul is conditional on no more than 180 million euros being spent to mop up the shares of investors who head for the door.
At Wednesday’s meeting, shareholders will be asked to approve merging Mediaset with its Spanish unit Mediaset Espana and putting both groups under a newly created Dutch holding, called MediaforEurope (MFE).
Mediaset, controlled by the family of Italy’s former prime minister Silvio Berlusconi, aims to use the new entity as a platform to develop continental alliances with other broadcasters and tackle competition from video-streaming services such as Netflix (NFLX.O) and Amazon Prime Video (AMZN.O).
The French conglomerate, led by media tycoon Vincent Bollore, opposes the plan because it includes a governance structure and a loyalty share scheme that would tighten the grip of Berlusconi’s family on the group.
Vivendi has been a hostile Mediaset shareholder since Bollore and Berlusconi fell out in 2016 over an aborted pay-TV deal, and the French group built a 29% stake in Mediaset - a holding that the Italian group considers illegitimate. The two sides have been in a legal war ever since.
Two-thirds of Vivendi’s stake in Mediaset is held by an arms-length trust which has in the past been barred from voting by an Italian court.
That leaves Vivendi with 9.99% direct voting rights. The group was granted the right to vote at the shareholder meeting by a Milan court last week, but its voting stake is not enough to block the deal on its own.
Mediaset is controlled by the Berlusconi family holding, Fininvest, which has a 45.8 percent stake, meaning it is almost certain of seeing the plan through.
Mediaset’s board will convene on Wednesday morning and is expected to keep the trust which holds the rest of Vivendi’s stake out of the shareholder meeting, preventing it from voting, a source close to the matter said.
Should Vivendi decide to exercise its withdrawal rights and sell its 9.99% stake, Mediaset would have to pay it around 310 million euros - more than the 180 million euros level it set itself as the maximum ceiling for investors opposing the deal.
Vivendi has not made clear whether it is prepared to head for the door. Doing so would translate in a loss of around 320 million euros on the whole holding for the French group.
Some sources also said that Bollore, who himself has been trying to build a south-European media giant, might prefer to remain as an investor in the hope the courts rule in his favor and he can eventually increase his sway over the company.
The Mediaset shareholder meeting is due to start at 0800 GMT at the company’s headquarters near Milan.
Reporting by Elvira Pollina. Editing by Jane Merriman