Vivendi calls for rejection of move to force it to return more cash

Vivendi is to put requests from US activist hedge fund P. Schoenfeld Asset Management to increase the amount of cash to be returned to shareholders for the 2014 financial year and to reject compliance with France’s so-called Florange law, designed to protect employees in the case of takeovers, to its shareholders meeting next month. However, the media group has strongly recommended that shareholders vote against the measures, which it says threatens its strategy to create a global media company. 

Vivendi confirmed that it has received requests from shareholders to put resolutions calling for the non-application of double voting rights to established shareholders under the Florange law and an increase the amount of the distribution proposed to shareholders with respect to fiscal year 2014 and the payment of an exceptional dividend, to the meeting, to be held on April 17.

P. Schoenfeld Asset Management, which holds under 1% of Vivendi stock, has claimed that the media company is undervalued due to its allegedly over-large cash holdings and inadequate capital return policy. According to Vivendi, the hedge fund last year sent a note calling for the sale of Universal Media Group, seen by the French company as key to its strategy alongside pay TV outfit Canal+.

The Florange law, named after the town of Florange, where a steel works owned by ArcelorMittal was threatened with closure, gives, among other things, double voting rights to shareholders of over two years’ standing in an enterprise. 

Referring to the hedge fund’s call for rejection of this rule, Vivendi management said “such a vote would contravene rules designed by the public authorities for groups such as Vivendi, whose operations are regulated, to stabilise their capital and encourage long term share ownership.”

Vivendi has also defended its capital return policy, saying that “its existing proposal to distribute over the next three years an annual dividend of one euro per share ensures shareholder loyalty, whilst maintaining the Group’s ability to carry out important internal and external growth projects”.

A third request, for an exceptional dividend, has been rejected by Vivendi’s board on the grounds that this relates to money that has yet to be received and that a distribution of this type would reduce its financial flexibility and threaten its medium-term strategy.

“Moreover, the Management Board believes that this proposed resolution would not be in the public interest and could be construed as an act of mismanagement that, if in the unlikely event it were approved, could lead to lengthy litigation, notably in terms of abuse of power,” Vivendi’s board said.