French conglomerate Vivendi has further increased its shareholding in Telecom Italia to 24.9%, just below the level that would require a formal takeover bid to be made.
An SEC filing seen by Reuters said Vivendi dropped €145 million to increase its stake in TIM from 23.8% to 24.9%. Owning a quarter of a public company’s shares requires a formal takeover bid to be made, something Reuters’ sources say is not in Vivendi’s plans. Instead, as the largest single shareholder and with four of its representatives on the TIM board, Vivendi can exert strong influence over the direction of the company without having to buy the remaining 75.1%.
A couple of weeks ago Bloomberg reported TIM’s CEO Marco Patuano’s position was being reviewed by Vivendi because he wasn’t doing what Vivendi wanted. The sources, presumably from within Vivendi, said Vivendi wants TIM to transform itself into a Southern European focused media group and is apparently prepared to replace Patuano with someone more compliant if he doesn’t play ball.
This last detail is crucial as moves like the sales of SFR and GVT pointing towards a Vivendi strategy of exiting the telco market in general. At the same time Vivendi has made aggressive moves towards French digital games companies Gameloft and Ubisoft as part of a stated group strategy back in the direction of content and media.
This in itself is an apparent change of direction in Vivendi’s already meandering corporate strategy since it reduced its stake in games giant Activision Blizzard in 2013. At the time Vivendi said it was going to refocus on its Universal and Canal+ operations but it look like the compulsion to expand and diversify has kicked in again, with majority stakes in streaming services Dailymotion and Radionomy recently acquired.
The intriguing dynamic with TIM remains Vivendi’s apparent reluctance to commit to a fully takeover bid. Presumably Vivendi wants to use its majority shareholder influence to steer TIM in a more media direction and then consider snapping it up only when that is successful. On one level this seems both clever and sneaky, but on the flip side the market will presumably be pricing these intentions into TIM’s shares, so it could end up being somewhat of a Pyrrhic victory for Vivendi, and if so wouldn’t be the first.