Bollore's raider reputation rattles Berlusconis in battle of billionaires

August 12, 2016 7:32 AM EDT

File photo of Vincent Bollore, Chairman of media group Vivendi, reacts during the company's shareholders meeting in Paris, France, April 21, 2016. REUTERS/Charles Platiau/File Photo


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By Mathieu Rosemain

PARIS (Reuters) - When French tycoon Vincent Bollore backed out of a deal to buy the pay-TV business of Italian broadcaster Mediaset (NYSE: MS), and instead proposed to take a large slice of the parent company itself, investors feared he was plotting another stealth raid.

The family of former Italian premier Silvio Berlusconi, which controls Mediaset, suspected Bollore would seek to loosen their grip on the company - concerns based on his history as a skilled and aggressive corporate tactician.

Through shrewd investments and creeping control methods, over three decades he has turned his Bollore group from a family-owned maker of thin papers into a global conglomerate that spans transportation and logistics, energy storage, communications and media assets including Vivendi (NYSE: VIV).

Bollore's Vivendi had agreed in April to acquire all of Mediaset's pay-TV unit, Premium, as part of a deal that would also see the two media groups take a 3.5 percent stake in each other.

But late last month it proposed new terms: it would buy just 20 percent of the unit, and also take bonds that could be converted to give it a total 15 percent stake in parent Mediaset. It said its change of plan was a result of differences with Mediaset in the analysis of Premium's financial forecasts.

The Berlusconis saw the situation very differently. Their holding company Fininvest said Vivendi's (NYSE: VIV) real reason for the U-turn was to covertly build up a big stake in Mediaset, denouncing the "total impropriety" of its conduct.

Vivendi declined to comment for his article. Its CEO Arnaud de Puyfontaine told Italian daily Corriere della Sera on July 30 that it had no plans to take over Mediaset.

Bollore has not spoken publicly about Mediaset, and could not be reached for comment.

Mediaset, which has repeatedly rejected Vivendi's alternative proposal, did not respond to requests for comment. Fininvest, which owns about 35 percent of Mediaset, did not provide fresh comment but has previously made clear it is opposed to Vivendi's proposed new terms.

STRICTLY BUSINESS

Bollore is a long-time friend of fellow billionaire Silvio Berlusconi. But for the 64-year-old Frenchman, dealmaking is never personal, it's strictly business.

"His reputation precedes him and, indeed, it frightened them (the Berlusconis)," said a source close to the negotiations. "They fretted that this 15 percent stake could make Fininvest lose its blocking minority in Mediaset following a capital increase."

Bollore's corporate career is strewn with examples of the tycoon wresting control of companies via minority stakes.

Vivendi itself is a case in point.

Bollore initially received a 4.4 percent stake in the media group in exchange for the sale of the two TV channels he had created to Vivendi's pay-TV arm Canal Plus. He has since built that stake up to over 15 percent.

He is Vivendi's biggest shareholder and its chairman. With his wealth of business success and political contacts, he is the undisputed kingpin.

Corporate raids might be resented by those who lose power, but they are a perfectly legitimate part of business, said Colette Neuville, who is the head of a French association that champions the interests of small shareholders and has known Bollore for over a decade.

"Bollore has shown his capacity to turn businesses around and he's playing by the rules," she told Reuters in an interview. "If you want no risk of being taken over, don't list your shares on a financial market."

Bollore has hired and fired top management and imposed his vision of turning Vivendi into a European media powerhouse - a reversal of its previous course of focusing on core assets - and taken key strategic decisions, including the company's big bet on Telecom Italia .

Vivendi initially acquired just 1.9 percent of the Italian telecoms firm in June last year. In under a year it had increased that to almost 25 percent, making it the biggest investor and giving it effective control.

It pushed for the resignation of Telecom Italia's former CEO Marco Patuano, who stepped down in March.

"As soon as he buys shares of a company, he tends to think that it's badly managed," said a senior French banker who has knowledge of Bollore's business dealings in Italy.

"He was absolutely convinced that Telecom Italia was a lame duck and that everything needed to be changed."

COUNTDOWN

The dispute with the Berlusconis is not the first time Bollore's business methods have tested personal relationships.

When his family conglomerate bought almost 9 percent of the Bouygues construction group in 1997, he assured company boss Martin Bouygues - his former school classmate - by phone that it would be a friendly move and that he would support Bouygues and not interfere with strategy.

A year later, he had about 13 percent and opposed a strategic decision taken by Bouygues to diversify the activities of the group into telecoms. "Bollore took me for an idiot," Bouygues told a French magazine in 2013. "He fooled, deceived and humiliated me. I'll never forget it."

In a rare reversal, Bollore backed off from the confrontation and sold all his Bouygues shares in 1998 following a big backlash by supporters of his rival industrialist both inside and outside the Bouygues group.

He defended his dispute with the Bouygues boss by saying he had no choice but to speak out against the telecoms strategy because he believed it would damage the company's finances.

Two decades on, and several deals later - including raids on the likes of advertising firm Havas and shipowner Delmas-Vieljeux - Bollore's appetite appears undiminished. As well as the proposed Mediaset deal, he has set its sights on the video games market - in a tussle that might be closely watched by the Berlusconis.

Vivendi took over mobile games maker Gameloft in June and has built up a 22 percent stake in its bigger sister company Ubisoft . Both companies were founded by the Guillemot family, which considers the move on Ubisoft to be hostile and has refused to allow Vivendi board representation.

Vivendi has said it does not intend to launch a takeover bid for Ubisoft, saying it wants to collaborate with the existing management so that synergies can be found with Gameloft.

"I don't believe the synergy argument," said Vikram Kumar, a hedge fund manager at London-based TT International, which owns more than 1 percent of Ubisoft shares. "If Vivendi wants to get the hands on the company, it has to be a purely financially based outcome."

Ubisoft declined to comment for this story.

Even though he has assembled an empire that stretches from Dakar to Dunkirk, and amassed an estimated net worth of more than $5 billion, Bollore is unlikely to disappear into retirement any time soon.

His publicly stated plan the idea is to hand over the Bollore group to his four children in six years' time. He has even set a countdown on his smartphone for Feb. 17, 2022, the date that will mark the bicentenary of the family group and supposedly end his career as pater familias for the company.

But not even his family is convinced.

"I don't believe one second in this countdown," his son Yannick told French newspaper L'Opinion last month.

"The more the deadline approaches, the less he looks at it."

($1 = 0.8981 euros)

(Additional reporting by Giulia Segreti in Milan; Editing by Richard Lough and Pravin Char)



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