Breakingviews - Bolloré nears rare draw in messy Italian campaign

Reuters Reuters

MILAN (Reuters Breakingviews) - Vincent Bolloré is staging a strategic retreat. Media conglomerate Vivendi, which the French financier controls, is nearing a deal to sell 20% of Mediaset as part of a broad truce with the Italian broadcaster, controlled by the family of ex-Italian Premier Silvio Berlusconi. A deal would end a wasteful legal fight with limited financial damage.

The three years and counting long fistfight between the two ageing media tycoons started after Vivendi ditched an agreement to purchase Mediaset’s pay TV arm and then built a 29% stake in the 3 billion euro broadcaster. The French rival has also tried to stifle Mediaset’s grand plan to build a Dutch-based pan-European broadcaster.

The proposed truce sees Vivendi selling at a nominal 2.8 euros a share – around the market price - but receiving the equivalent of about 3 euros once interests and dividends are accounted for, Reuters said on Thursday. The deal would likely involve the two sides dropping legal charges. Mediaset is also insisting that Vivendi agrees to cap its remaining stake for five years.

Bolloré’s partial exit is an implicit admission of defeat. But it is also a managed retreat. The overall consideration would be some 160 million euros below Vivendi’s average purchase price of 3.7 euros, bearable for 30 billion euro Vivendi, which has in any case already written down its Mediaset stake. If the Italian group’s pan-European broadcasting venture proves successful, Bolloré could still enjoy a financial upside on his remaining investment.

For Mediaset, the real benefit is to end litigation and press ahead with its merger plans without having Vivendi as a thorn on the side. That’s why it is sweetening the share deal.

Still, Vivendi’s overall Italian strategy has some issues. Bolloré’s initial desire to build a Southern European rival to U.S. content streaming player Netflix remains far-off. The French group’s 24% stake in Telecom Italia, for which it paid 4 billion euros, is worth about half that price today and has been marred by a spat with U.S. activist investor Elliott. Things are looking calmer, but it is yet to be seen whether a new Telecom Italia management can revive the operator’s fortunes.

Bolloré may have scored a draw on Mediaset, but his Italy campaign is overall still in retreat.  

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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