Mediaset prepares defences as Vivendi closes in on 30% threshold

The Berlusconi family has moved to shore up its defences against Vivendi as Mediaset prepares to present its three-year business plan to international investors in mid-January.

Vivendi revealed just before Christmas that it had now upped its stake in the Italian broadcaster to 28.8%, with control of 29.94% of the voting rights, following a series of moves that saw it take control of Mediaset shares over the previous two weeks.

Vivendi’s stake is now just short of the 30% threshold that would force it to make a mandatory public offer for the rest of the company’s shares.

Mediaset is expected to clarify its strategy for pay, free and OTT TV at the January meeting, which has been delayed a number of times as a consequence of the battle with Vivendi, following the French company’s decision not to go ahead with last April’s deal to take control of the Italian broadcaster’s loss-making pay TV arm. Investors are also likely to look for clarification on whether the war with Vivendi will continue or whether Mediaset will seek a compromise deal.

The Berlusconi family has sought to shore up support from allies as well as boosting Finvinvest’s stake to 39.7%, just short of the threshold that would require it to launch a takeover bid.

With trading on the Italian stock market reopening today after the New Year break, observers are focusing attention on Vivendi’s aims as well as Mediaset’s defensive strategy.

The French media group’s moves ahead of Christmas prompted analysts at Berenberg to downgrade Mediaset to ‘hold’ after the Italian group’s shares spiked.

Berenberg said that the group’s valuation reflected “the situation with Vivendi, rather than the fundamentals” and raised its price target to €4.20, based on the assumption that either Mediaset Premium would be sold to Vivendi or that a deal with “the same financial outcome” would emerge.

Vivendi is thought unlikely to make an offer for the whole of Mediaset at this time as its prospects of squeezing out Fininvest are poor. Berenberg said that the acquisition of the 28.8% stake would nevertheless “put a floor under [Mediaset’s] shares for the near to medium term”.

Berenberg speculated that Vivendi may still “conclude a transaction as originally envisaged”, which it said would “clear the air to some extent, and demonstrate Vivendi’s goodwill towards Mediaset” as well as supporting the Italian group’s share price and removing the risk of damages of up to €2 billion being imposed on it by the Italian courts.

Italy’s competition regulator has meanwhile hinted that an alliance between Vivendi and Mediaset could raise competition issues, particularly if it involves Telecom Italia, in which Vivendi is the largest shareholder. In a report on the Italian audiovisual sector, ACGOM said that integration of a major TV company and the dominant telecom operator, built around converged offerings, could pose competition risks.

ACGOM had earlier said it intended to investigate whether Vivendi’s moves breached cross-ownership rules.