Elliott looks to chase Vivendi out of Italy

Vivendi’s influence over TIM despite not owning the company is remarkably strange and it seems activist hedge fund Elliott has finally had enough of it.

According to the FT, the hedge fund is looking to shake things up at TIM by trying to run Vivendi CEO Arnaud de Puyfontaine, who also acts as TIM’s Executive Chairman, as well as four other Vivendi ‘friendlies’ out of the board room. The showdown is set to take place during the annual general meeting next month, but Elliott is wasting no time in vocalising its distaste for the situation. The issue is a simple one; Elliott thinks the share price should be higher and it wants to make changes to ensure it does go upwards.

The last couple of months have been quite incredibly when it comes to the balance of power. Despite only owned 24% of the telco, Vivendi seems to be in an incredible position of power to influence activities at TIM, which did raise some voices of concern from the Italian government. Spinning off the fixed infrastructure business into an independent, but still wholly owned, business does seemed to have appeased the government, but Elliott is still standing defiantly.

Elliott has told TIM it wants to remove de Puyfontaine from his position, as well as four others who have strong links to the French media business. To replace the five, Elliott has put forward its own preferences, all of which have weighty reputations in the Italian business world. The suggested replacements are as follows: Fulvio Conti, Massimo Ferrari, Paola Giannotti De Ponti, Luigi Gubitosi, Dante Roscini and Rocco Sabelli.

This is of course not the first time Elliott has been hitting the headlines for making noise. In 2015 the hedge fund was incredibly vocal in trying to stop dodgy dealings regarding the acquisition of Samsung’s construction business by another part of the family for an incredibly low price. It might have failed to get its way in this example, but this is the only example of failure in the 50-odd activist campaigns it has launched over the last five years. Usually when Elliott starts making noise, people listen.

It isn’t tough to see why either. Elliott is regularly ranked in the top 10 hedge funds worldwide, with roughly $34 billion of assets under management. Its known for seeking out distressed organizations which are underperforming and helping formulate a turnaround. It has a rather unpleasant nickname of being a ‘vulture fund’, but it is generally successful at what it does.

And it does appear that the message has been received by Vivendi. The French media giant has released a statement in which it confirms it has heard the concerns and like Elliott has an interest in raising the share price of TIM. de Puyfontaine is even considering suspending his executive functions at TIM as a means to disarm the situation.

With the Vivendi push for power, the revolving door of executives, government involvement, spinning off of assets and now the intrusion of an activist shareholder, TIM is proving to be one of the most interesting companies in the telco space right now!