Vivendi inevitably tries to get rid of some Elliott directors

It was just a matter time before Vivendi reacted to its man being sacked as CEO of TIM and replaced by an Elliott ally.

A month ago the artist formerly known as Telecom Italia sacked its CEO, Amos Genish. The general assumption was that this was due to a disagreement between Genish and the board, which is dominated by activist investor Elliott. But since Genish was appointed back when Vivendi dominated the board, it was assumed to be just a matter of time before Elliott got rid of him.

Within a week TIM had a new CEO, Luigi Gubitosi, who just happened to be one of the people on the board nominated by Elliott. There was a bit of subsequent moaning, but the real action was always expected to be a renewed attempt by Vivendi to regain control of the board and, presumably, replace the CEO once more.

The method of doing so had been strongly hinted at in Vivendi’s initial response to Genish’s sacking. On the same day TIM issued a statement in response to public comments from Vivendi, the key section of which was went as follows.

‘As for Vivendi’s statement that it “deplores” the decision to not call a shareholders’ meeting to renew the external auditors, it should be noted that this statement is untruthful (since the BoD has not yet made any decision on this point) and misleading (given that no law requires the external auditors to be appointed before the shareholders’ meeting that will be called to approve the financial statements as at 31 December 2018).’

Last week TIM’s board convened, made one or two committee appointments and did a few other bits of corporate housekeeping, but didn’t address the external auditor thing. This was all the pretext Vivendi needed to make another move on the board and it made the following statement in a press release today.

‘In spite of the recent strong recommendation by the Collegio Sindacale (Statutory Auditors), the Telecom Italia Board, composed by a majority of Elliott backed Board members, decided on the 6th December not to convene an immediate Shareholders’ Meeting to vote for the appointment of new financial Auditors.

‘This decision, like many others before, goes against all the rules of proper corporate governance and is a source of disorganization.

‘For this reason, Vivendi has decided to write to the Board before the end of the week, to urge it to convene a Shareholders’ Meeting as soon as possible to appoint new financial auditors, revoke five current Board members from the Elliott list of ten, particularly those who were involved in these governance issues, and propose five new ones.’

There are 15 people on the TIM board. Currently ten of them were proposed by Elliott and five by Vivendi, so Vivendi needs a swing of at least three to regain control. We asked TIM for comment but they had nothing to add at this stage. It seems unlikely that TIM would be anything other than hostile to Vivendi’s demands, so we can expect another round of public lobbying of TIM shareholders by both parties as they continue to try to impose their will on the company.