December 12, 2016 / 11:41 PM / a year ago

Mediaset fears takeover attempt as Vivendi targets 20 percent stake

(This version of the story corrects to add dropped “former” from Berlusconi’s title in paragraph four)

The Mediaset tower is seen at the headquarter in Cologno Monzese, near Milan, Italy, April 8, 2016. REUTERS/Stefano Rellandini

By John Irish and Agnieszka Flak

PARIS/MILAN (Reuters) - Vivendi (VIV.PA) said on Monday it holds just over 3 percent of Mediaset (MS.MI) and could raise that to as much as 20 percent in a move the Italian broadcaster’s top investor called a first step toward launching a hostile takeover bid for the company.

The announcement only aggravates a months-long feud between the French media giant, led by chairman and biggest shareholder Vincent Bollore, and the Italian broadcaster controlled by the family of former Prime Minister Silvio Berlusconi.

The two companies have been at loggerheads since July when Vivendi backed out of an agreement that would have given it control of Mediaset’s pay-TV division Premium and handed the two firms 3.5 percent stakes in each other.

Buying into Mediaset is part of Bollore’s strategy to expand into southern Europe and transform the French company into an integrated European media powerhouse.

“Vivendi intends to carry on its purchase of shares in Mediaset, depending on market conditions, to become, if possible, the second industrial shareholder in Mediaset, which to begin with could represent 10 to 20 percent of Mediaset’s capital,” it added.

The Vivendi logo is pictured at the main entrance of the entertainment-to-telecoms conglomerate headquarters in Paris, March 10, 2016. REUTERS/Charles Platiau

Berlusconi’s investment holding Fininvest, which controls Mediaset via a 34.7 percent stake, lashed out at Vivendi, accusing it of trying to depress the company’s share price to then launch a “hostile takeover” at a discounted price.

“Vincent Bollore and Vivendi have shown what their true intentions towards Mediaset were from the very start,” it said.

Fininvest added it does not intend to diminish its role as Mediaset’s main shareholder and would use all means to block what it considered a “very serious deception” of market rules.

Bolloré, a key shareholder of Italian investment bank Mediobanca, has built a reputation over the years as a corporate raider, resorting to different strategies to take control of businesses.

Vivendi is already the top shareholder at phone group Telecom Italia (TLIT.MI) with a stake of around 24 percent and some bankers have spoken of plans to combine the two Italian firms. All parties have repeatedly denied such speculation.

Mediaset, which is already suing Vivendi for damages over the pay-TV deal, echoed Fininvest’s comments, adding it had been unaware of Vivendi’s stake building until the statement.

Vivendi said in October it was no longer keen on finding an amicable solution to the dispute following several accusations by Mediaset.

“Given that the strategic industrial partnership ... goes beyond what’s at stake in this dispute, Vivendi announces that it has gone over the 3 percent threshold in Mediaset’s capital and now holds 3.01 percent,” it said on Monday.

additional reporting by Stephen Jewkes in Milan, editing by David Clarke and Jonathan Oatis

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