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Lagardère sells stake to Vivendi amidst Amber Capital ‘attack’

French media group Lagardere General and Managing Partner Arnaud Lagardere (Photo by ERIC PIERMONT/AFP via Getty Images)

French media group Vivendi has acquired a 10.6-per-cent stake in Lagardère, the France-based conglomerate that recently sold its sports division to H.I.G. Europe, an arm of the international private equity and asset management firm.

The investment from Vivendi, the owner of France-based pay-television broadcaster Canal Plus, comes with Lagardère being put under intense pressure from activist investor Amber Capital, the investment fund.

Vivendi said: “This acquisition is a long-term financial investment reflecting Vivendi’s confidence in the future prospects of the French group which enjoys international leadership positions in its businesses and which, like many others, is experiencing difficult times at the moment.”

Vivendi recently sold 10 per cent of its shareholding in Universal Music Group to Chinese internet giant Tencent in a deal valuing the music unit at €30bn ($32.6bn). Vivendi becomes the third-largest shareholder in Lagardère behind Amber Capital (16.4 per cent) and the Qatar Investment Authority (13 per cent).

Lagardère last year sold its television channels to the RTL-owned M6 Group for €215m but retains ownership of radio assets such as French stations Europe 1, Virgin Radio and RFM.

The Paris-based group has sold off what have been viewed as underperforming assets, including a majority stake in its sports division, to refocus its business on its Publishing and Travel Retail divisions.

In February, Lagardère closed the agreement to sell 75 per cent of Lagardère Sports, previously one of the sports industry’s heavyweight players, to H.I.G. for €110m. The Lagardère group will retain a 24.9-per-cent stake but the sports operation will be rebranded under H.I.G.’s ownership.

At the same time, it was announced that the erstwhile Lagardère Sports and Entertainment division generated revenues of €523m in 2019 and recurring Ebit of €66m.

Amber Capital, Lagardère’s largest shareholder, has been attempting to oust the company’s management led by general and managing partner Arnaud Lagardère as the company’s publishing and travel retail activities continue to be hit hard by the Covid-19 pandemic.

Ahead of the Lagardère Annual General Meeting on May 5, Arnaud Lagardère has co-signed a letter to shareholders that highlights a “provocative” attack by Amber Capital and escalation of “the activist campaign it has been waging since 2017”.

The letter says that the supervisory board has unanimously recommended rejecting the resolutions proposed by Amber Capital.

It reads: “You are being asked to choose between the implementation of a responsible, clear and ambitious strategy led by the managing partners and supervisory board, and Amber Capital’s radical, unsettling and uncertain proposal.”

The letter adds: “The timing of this attack is also inappropriate, when the Group should be concentrating all its efforts on limiting the impact of this crisis in the interest of all its stakeholders.

“Amber Capital is proposing a clean sweep of the existing supervisory board and to appoint members with not particular in-depth knowledge or experience of the Group’s businesses, whose selection process has not been transparent and whose independence from Amber Capital is far from assured.

“This proposal is also irresponsible as it would end in institutional deadlock, especially in these exceptional circumstances where long-term thinking, intimate understanding of the Group’s challenges and smooth functioning of the governance bodies are more critical than ever.”