An endless question and answer what is being done between Elliott and Vivendi in view of the shareholders' meeting on Tuesday 24 April, which has now become a real day of judgment on the future of Telecom Italy.
After the vitriolic words contained in the document released by Tim through which the management soundly rejected the plan presented by the US fund for the company, today it's up to Paul Singer's vehicle to counterattack and have its say on what should be the path to follow for the Italian telecommunications giant.
ELLIOTT'S ANSWER
And the US Fund did not go lightly. Ellliot believes that “Vivendi's April 17 statement lacks substance and is full of clichés that don't address the problems that plagued Tim under Vivendi's direction from the outset. Notably, Vivendi repeatedly refers to itself as Tim's “major” shareholder. It really isn't; he is only the largest shareholder, and Elliott believes Vivendi's interests are no more important than those of other Tim shareholders." Furthermore, contrary to Vivendi's claims, Elliott "strongly believes that it is never premature for companies to create value for their shareholders."
The fund still claims that “shareholders need a joint board, not one divided and bogged down in a dispute with its mayors. Shareholders deserve the opportunity to unlock significant value by supporting Elliott's proposal, which begins with the election of a truly independent board of directors on April 24."
The reference is precisely to the meeting of 24 April which will have on the agenda the request for revocation presented by the Elliott fund of the 6 directors representing the French shareholder with the consequent integration of the board with 6 new independent representatives, the climate is therefore becoming increasingly incandescent. We remind you that it is scheduled for tomorrow, Friday 20 April the hearing in the court of Milan on urgent appeals presented by the Telecom board of directors and by Vivendi against the decision of the board of statutory auditors to accept the requests of the US vehicle to integrate the agenda of the Telecom assembly on April 24th. The judge's decision is expected on Monday, just on the eve of the meeting.
ELLIOTT: VIVENDI “HAS CONFLICTS OF INTEREST”
The management of Telecom Italia "should be led by the current CEO (Amos Genish, ed) and by a board of directors rather than by a single shareholder". He says the American fund, also specifying that he failed to "identify any previous example of a telecommunications company that required a media company to control its board of directors in order to create value for shareholders"
Telecom Italia, continues Elliott, "needs a board made up of truly independent directors who will finally put the interests of the shareholders first". Then the lunge: “Vivendi had “no regard for proper governance and displayed numerous conflicts of interest”.
Elliott then adds that “when the Italian authorities publicly state that Vivendi is a 'bad' shareholder, it is clear that the status quo is unsustainable. It's time to change in Telecom Italia”.
Not only that, the American vehicle includes in its rant too mediaset, (of which Vivendì held a 19% stake transferred a week ago to a blind trust to comply with Agcom's requests), stating that the French have failed "to cooperate with the Italian regulator and government not only for Telecom Italia, but also in his previous hostile takeover attempt of Mediaset”.
The series of accusations does not end. Indeed, according to the Americans Vivendi would have acted to benefit only himself, as demonstrated by “transactions with related parties that allow Vivendi to obtain benefits for group companies such as Canal Plus and Havas, to the detriment of Tim and its shareholders”. “There are numerous examples – continues Elliott – which show that Vivendi acted in its sole interest: including the blocking of the conversion of savings shares, the violations of the “golden power” and the Gasparri Law, the appointment of non-independent directors, the appointment of managers with conflicting roles such as Michel Sibony”.
THE TELECOM ITALIA SHARE
Elliott then concentrated on the performance of the stock, which opened on Thursday in Piazza Affari with +2% and at 14,25 pm it gained 1,67% (+6% in the last month): "In just over two years Tim's stock is down more than 35%. The negative trend in the performance of Tim's shares – adds the fund – has accelerated since Vivendi's candidates entered the board of directors in December 2015”.
VIVENDI'S COUNTERANSWER
“Vivendi is committed to investing in Italy, so far it has invested 4 billion. Our strategy aims at the convergence of content and distribution and Tim is a fantastic opportunity,” said the French spokesman during a meeting with the Italian press on the sidelines of the group meeting. “After May 4, we will continue to be the largest shareholder in Telecom, come what may. We will not go away”, insisted the exponent of the French group, emphasizing that Vincent Bollore “has been in Italy for 19 years and this agitation over Telecom began three months ago”. Elliott has short-term strategies and wants to dismantle all the dossiers in which he has entered Europe, "he doesn't have a 'love affair' with Italy", he later pointed out.
Vivendì then shows confidence on the outcome of the shareholders' meeting with Paul Singer's fund, or rather on how investors will line up. “CEO Genish did a road show and saw many investors. It has been listened to and the reactions have been very positive,” explained the spokesman.
Finally, the French commented the entry into Telecom Italia's capital of Cassa Depositi e Prestiti, judging it "positive" given that CDP has "medium-long term strategies".
In the morning the CEO of Telecom Italia had also had his say, Amos Genish. In an interview given to Sun 24 Hours, the CEO declared: “Tim is a project close to my heart and I consider it a privilege to remain at the helm. Certainly if the composition of the Board changes, the plan will have to be reconfirmed, it will be necessary to verify whether there will be a climate of trust and alignment with the CEO on the board: it is a question of chemistry".
DE PUYFONTAINE: "ELLIOTT'S CRITICISM CONTRARY TO THE REALITY OF THE FACTS"
According to Arnaud de Puyfontaine, CEO of Vivendi and president of Telecom, the criticisms advanced by the Elliott fund against the French group for managing the Italian company are "contrary to reality", given that the telecom operator's performance is "the best for ten years now. I remind you that, since Vivendi entered, there has been the announcement of the arrival of Iliad on the Italian market which creates a lot of speculation and that during spring 2016 there was the announcement of the creation of Open Fiber. Furthermore, there is an encouraging European and Italian economic context. All these factors have impacted the value of the share. Telecom is achieving the best performance for ten years, nobody said that”.
As for the industrial project, which integrates the voluntary separation of the grid, "it is something that has been talked about for over a decade, we do it", added the manager. Thus, Elliott's comments are aimed at justifying opposition to the Vivendi-backed project and are “contrary to reality. We have to be serious”, is the conclusion.
