By Ruth Bender
PARIS--A tussle between a defiant Vivendi SA and one of its
shareholders gathered pace on Tuesday, as a prominent U.S. hedge
fund tried to rally support from other shareholders in its quest to
obtain higher dividends.
P. Schoenfeld Asset Management came to Paris with one main
message: Vivendi should share its war chest with shareholders. "The
amount of money in Vivendi's coffers is irrational," the fund's
chief executive Peter Schoenfeld said in a meeting with
journalists. "There is one clear issue: the dividend is
inadequate."
Vivendi fired back, signaling that the battle the fund is
preparing to fight could be a tough one. The French company said it
recommends shareholders vote against fund's proposed resolutions
for the French media company's annual meeting on April 17.
The Schoenfeld fund wants Vivendi to return 9 billion euros ($10
billion) to shareholders through a special dividend, over EUR3
billion more than the company has pledged to return to holders.
"This U.S. hedge fund wants to dismantle Vivendi and take the
cash," said a Vivendi spokesman. "We won't let it happen." In a
statement, Vivendi said such an amount of distribution would
"significantly reduce Vivendi's financial flexibility and
jeopardize its development strategy."
The move from the fund, which owns around 0.8% of Vivendi
according to Mr. Schoenfeld, comes as Vivendi has amassed billions
in cash as it slimmed down from a telecom-to-entertainment
conglomerate to a much smaller media-centric version.
Vivendi has sold off assets that accounted for more than half of
its revenue, including video games maker Activision Blizzard and
telecommunications companies in France and Morocco. But the group
has provided little indication of what it plans to do with its cash
and how it plans to develop the company in the future, except that
it wants to build a global media and content group. The silence has
frustrated some shareholders.
P. Schoenfeld Asset Management is the first shareholder to
challenge Vivendi since French billionaire investor Vincent
Bolloré, who owns 8.2% of the company, became chairman last
June.
The fund argues Vivendi is undervalued because of its large
stockpile of cash and uncertainty over how the group plans to use
its funds in the future. Mr. Schoenfeld said he would try to
convince as many shareholders as possible to support his case
before the vote in April. The fund also said selling off all or
parts of Universal Music Group, one Vivendi's two remaining
businesses, could create value.
With less than a month before Vivendi's annual meeting and
representing only a small amount of shareholders, analysts see
little chance for the Schoenfeld fund succeeding in challenging
Vivendi's chairman. "We believe that it is highly unlikely that
PSAM's approach is successful, as Bolloré undoubtedly had plans to
reinvest the EUR14 billion cash balance to further ambitions in
content and in Africa," said Conor O'Shea from Kepler
Cheuvreux.
The fund, which in the past made headlines for opposing Deutsche
Telekom AG's terms to buy U.S. wireless carrier MetroPCS
Communications Inc., said it has sent three letters to Vivendi
since 2013 with suggestions on how to improve the value of the
company but hasn't received any response or met with
management.
"Shareholders deserve more information. If we leave them with
all this leeway, they will never seek any sort of approval for any
future plans with shareholders," Mr. Schoenfeld said. He said the
company's big pile of cash could tempt management to spend it
unwisely.
Several other Vivendi shareholders, including Société Générale
unit Lyxor Asset Management, Amundi Asset Management and Natixis
Asset Management, declined to comment on the Schoenfeld fund's
resolutions.
Vivendi on Tuesday also faced rumblings from another group of
minority holders, on a separate request. French fund PhiTrust filed
a third resolution asking that Vivendi not apply a new government
law that gives double voting rights to investors that have held
shares for at least two years, a move designed to encourage
long-term investments.
Denis Branche, partner at Phitrust, said the he made the request
on behalf of a group of nine shareholders representing slightly
less than 2% of Vivendi's capital. Vivendi recommended against the
resolution.
Write to Ruth Bender at Ruth.Bender@wsj.com
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