May 16, 2021

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Lagardère heir strikes truce to keep control of group

3 min read

Arnaud Lagardère has struck a truce with activist hedge fund Amber Capital and two of France’s richest men who have been battling for control of the French media and retail group his father founded.

Confirming earlier reports, the heir will give up the powerful influence conferred on him by Lagardère group’s distinctive legal status as a société en commandite par actions, which has allowed him a veto on most company decisions despite owning just a 7 per cent stake.

In exchange for agreeing to turn Lagardère into a conventional société anonyme, Arnaud Lagardère will receive an additional 10m new shares in the company or 7 per cent of its share capital, the company said on Wednesday. He will also have three seats on a new 11-member board of directors, and a contract to serve as chief executive for six years.

The deal is subject to approval by regulators and a shareholder vote at the annual meeting on June 30, but it is likely to pass since the key players have all agreed.

It also means that a break-up or a sale of the business, which had been under discussion and opposed by the heir, is likely to be off the table in the short term.

Vivendi, which is controlled by billionaire Vincent Bolloré and is Lagardère’s biggest shareholder with a 29 per cent stake, had been interested in book publisher Hachette and radio station Europe 1, both Lagardère assets, according to people familiar with the matter.

LVMH founder Bernard Arnault, who last year invested in Arnaud Lagardère’s personal holding company and bought an 8 per cent direct stake, was said to want to buy influential French media outlets, the Journal du Dimanche and Paris Match magazine.

All of the once-warring parties will share power on the new board of directors: Vivendi will have three seats like Arnaud Lagardère, while Amber, Arnault, and the Qatar Investment Authority will each have one seat.

It would take a two-thirds majority vote on the board to replace the chief executive and three-fifths for any asset sale above certain thresholds.

The truce is the culmination of months of discussions among the factions and was facilitated by former president Nicolas Sarkozy, who is on the Lagardère board, said people close to the talks. The catalyst was the upcoming shareholder meeting at which Amber would have again sought to replace the board, and could have succeeded since it has been allied with Vivendi since last summer.

Sarkozy, who is close to Arnaud Lagardère and Vincent Bolloré, encouraged the men to negotiate a solution instead.

It is not the first time that the former president has played a key role at the company — he advised Arnaud Lagardère to bring in Vincent Bolloré as a shareholder ahead of last year’s annual meeting, to help fend off an earlier board putsch by Amber.

That worked initially but then backfired when Bolloré continued buying shares to just under the threshold for a takeover offer.



2021-04-28 04:30:10

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