Updates from Lagardere Group
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Vivendi has reached an agreement to buy activist investor Amber Capital’s 17.9 per cent stake in French media and retail group Lagardère, paving the way for a full takeover bid if regulators approve it.
Vivendi was already the largest shareholder in Lagardère with a 29 per cent stake, and the deal with Amber will take its stake to 45 per cent, beyond the threshold that requires it to make a mandatory offer for the rest of the company.
The announcement is the latest twist in a five-year struggle for control of Lagardère, and that means CEO Arnaud Lagardère will be powerless to stop the sale of the group his late father founded in a defense-to-media powerhouse.
The son and heir has reduced the business, whose largest businesses are now the Hachette book publishing house and stores in transport hubs such as Relay newspapers.
Arnaud Lagardère only recently in April agreed to dissolve the characteristic Partnership a structure that had long ensured his control over the group, even though he had only a 7% stake.
But when Lagardère was transformed into a normal sanonymous company, it has made the business vulnerable to takeover in a way it never has been. Arnaud Lagardère agrees to the change after receiving an additional 7% stake, board seats and a five-year contract as CEO.
The saga started it in 2016, when Amber launched an aggressive activist campaign to challenge the group’s poor financial performance and the poor leadership of Arnaud Lagardere. Amber tried several times to replace the board and failed, until last year it was on the verge of winning a vote at the shareholders’ meeting.
To defend himself, Arnaud Lagardère sought help from powerful investors, including Vivendi, which is controlled by billionaire Vincent Bolloré, who invested and supported the family figure in the vote.
Once Amber’s resolutions does not succeed however, the shareholders’ meeting in May 2020 did not last long. Vivendi continued to buy additional shares, which upset the CEO of the target. He turned to the founder of LVMH, Bernard Arnault, who came rescue by investing in the personal holding company of Arnaud Lagardère and later directly in Lagardère.
In response, Vivendi reached a surprise alliance with Amber, who gave him the privilege of buying the fund’s stake in Lagardère when he wanted to sell.
Amber told Vivendi last week he wanted to sell and the two began negotiations.
Said Vivendi in a statement Wednesday that he agreed to pay Amber € 24.10 per share in Lagardère, or about € 610 million, provided it obtains regulatory approval from the French authorities and the European Union.
Competition regulators are likely to scrutinize the deal, as Vivendi already owns French book publisher Editis, which is competing with Hachette, so some asset sales may be needed.
If Vivendi for some reason is unable to complete the purchase of Amber’s interest by December 15, 2022, another buyer for Amber’s interest must be found at the same price.
Lagardère said in a statement that he ‘was delighted with the investment project that Vivendi wants to carry out’ and promised that his board would later weigh the proposed public offering.
Asked what would happen to Arnaud Lagardère after a takeover, a Vivendi spokesman said: “He now has the full support of Vivendi and beyond.”