Vivendi shareholders will abstain from voting on a Telecom Italia share conversion proposal, as the companies look set for a showdown at the operator’s annual meeting, scheduled for tomorrow (15 December).
Vivendi, Telecom Italia’s top shareholder, currently holds a 20.1 per cent stake in the company, but a Telecom Italia plan to convert savings shares into ordinary shares would see its holding diluted to 14 per cent if approved by a two-thirds majority of shareholders.
Shareholders were due to vote on the plans at Telecom Italia’s extraordinary meeting, scheduled for tomorrow, along with a proposal from Vivendi to add four of its executives to Telecom Italia’s board of directors, a move which is also reportedly likely to fail after opposition from investment funds with interests in the Italian company.
In a statement, Vivendi said its decision to abstain was based around questions on the fairness of the proposed conversion ratio, which stands at a cash payment of €0.095 to convert a saving share into an ordinary share.
The company also raised questions over fairness of the proposal with regards to holders of the ordinary shares, “who would be significantly diluted in this transaction”.
“Finally, Vivendi believes that the decision to propose a savings shares conversion plan should rest with a board of directors that bests represents the current shareholders of Telecom Italia,” it added, commenting on its own proposal to add its own executives to the board.
In response, Telecom Italia defended its position, claiming the terms of the conversion proposal had been determined by its two advisors Citi and Equita, and are “comparable to those of the many and recent precedents”.
The company added that its proposal had been met with approval from financial analysts, shareholders and board of directors.
Xavier Niel, Telecom Italia’s recently emerged shareholder with options on a 15.1 per cent stake, could also see those options reduced to a 10 per cent stake, should the conversion proposal go through, according to Reuters.