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Vivendi Snaps Up 12% of Mediaset, Sparking Takeover Attempt Speculation

ROME – French Media conglomerate Vivendi on Tuesday became the second-largest shareholder in Italian broadcaster Mediaset by rapidly buying more than 12% of its shares after saying it intends to build that up to as much as 20%.

The surprise move is sparking speculation of a hostile takeover attempt just as the two companies are sparring in court over a partnership agreement they signed in April which went sour.

Vivendi on Tuesday morning first revealed the acquisition of 3% of Mediaset, then later in the day said it had raised its stake to 12.3%.

Mediaset shares on Tuesday jumped as much as 36%, their biggest one-day gain ever, prompting a temporary suspension of trading.

Mediaset’s top shareholder, Fininvest, said Tuesday that it had filed a complaint with Italian authorities and with market regulator Consob, alleging market manipulation.

Mediaset is calling Vivendi’s decision to buy more of its shares a hostile takeover attempt following the 30% dive in its share price following the French company’s decision to pull out of the partnership deal.

The deal would have seen each of the two companies take a 3.5% stake in the other; in addition, Vivendi would have acquired Mediaset’s pay-TV business, Mediaset Premium. But in July, Vivendi essentially withdrew from the deal, which has resulted in escalating tensions.

Mediaset, which is controlled by former Italian Prime Minister Silvio Berlusconi and his family, alleged breach of contract and claimed at least 1.5 billion euros ($1.6 billion) in damages if the deal collapsed, plus an estimated at 50 million euros ($56.6 million) per month – stemming from the drop in share price – for every month of its delay starting from July 25.

Vivendi is now the second shareholder in Mediaset after Fininvest, which holds just under a 35% stake.

For Fininvest, “buying more Mediaset shares to reach control, with 51%, would be difficult, given that they are not flush with cash,” an Italian analyst noted on Tuesday.

Vivendi in a statement on Monday said that “becoming a Mediaset shareholder is…in line with the group’s intention to develop its activities in Southern Europe and its strategic ambitions as a major international, European-based, media and content group.”

The Vivendi statement noted that it believes that that the strategic interests of the partnership announced in April “supersede the stakes of the lawsuit.”

Vivendi Chairman Vincent Bollore (pictured) is known as a corporate raider. He controls Vivendi with a 20.4% stake. Vivendi controls Telecom Italia in Italy with 24.9%, just below the 25% threshold that would force it to launch a takeover bid. Vivendi is also currently in the midst of an attempted hostile takeover of Videogames company Ubisoft, in which it now holds a more than 25% stake.

Mediaset has announced it will do everything it can to block what it describes as Vivendi’s takeover moves.

A Mediaset statement issued Monday evening said that “Mediaset’s first preoccupation at this time is to protect the interests of all its shareholders, to continue legal action [against Vivendi], now updated after these new developments, and to evaluate the real goal of these generic French moves and how they fit within Mediaset’s strategy,”

It added that it would work with two Italian banks, Intesa Sanpaolo and Unicredit, to fight back.

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