French Lagardère exposed to takeovers as heir’s grip weakens – sources

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Arnaud Lagardère, the boss of the French media group Lagardère, attends the group’s general meeting of shareholders in Paris, France, on May 3, 2018. REUTERS / Charles Platiau

PARIS, July 2 (Reuters) РThe heir to French group Lagard̬re found himself with a lower stake than announced after restructuring, further reducing his influence after giving up the veto that protected the company and its media assets influential takeovers.

Arnaud Lagardère indeed owns 11% of the conglomerate, and not the 14% attributed on paper to his holding company when a previous partnership structure was finally dissolved this week, according to two sources familiar with the matter and company statements.

Lagardère stock closed 6% higher at 22.40 euros, accelerating its gains after Reuters revealed the size of its stake, traders said. Lagardère was the first riser in the SBF 120 index (.SBF120).

Less than a year from a French presidential election, Lagardère’s overhaul (LAGA.PA) made it more vulnerable to a possible takeover that would change the French media landscape, with Paris Match magazine, a radio station and a Sunday newspaper among some of its valuable assets.

The smallest participation not previously reported does not change the votes that Chairman and CEO Arnaud Lagardère obtains in the boardroom.

But that’s another sign of his weakened hand. Under pressure from personal debts and a militant campaign last year, Lagardère sought allies, eventually bringing on board two of France’s richest businessmen and negotiators, media mogul Vincent Bolloré and the luxury billionaire Bernard Arnault, who are now investors with seats on the board.

“In the end, Arnaud Lagardère negotiated to keep his status more than the economic equation,” said one of the sources familiar with the matter.

While Arnaud Lagardère previously held only 7% of the company, this stake was accompanied by special powers which allowed him to block decisions.

The dismantling of this structure as new investors pushed for more influence gave his holding company the right to double its stake to 14%, but some of those shares are indeed owed to Bernard Arnault, according to statements by the business.

The two sources confirmed that Arnault, who already owns 7%, is entitled to at least an additional 3% of Lagardère as part of the company’s transformation into a joint stock company, and could claim more shares if he wish to cash the participation. .

The businessman, who heads luxury giant LVMH (LVMH.PA), insisted that the Lagardère group mentions this right in recent company files, the people added, after being unhappy with how the restructuring of the company went.

A spokesperson for the financial investment vehicle Financière Agache d’Arnault declined to comment.

Bolloré and its Vivendi group emerged as the big winners in the overhaul of Lagardère, with a 27% stake and influence at the board level.

Three investor and banking sources have said Vivendi is a prime candidate to launch a full takeover, especially if other interested parties come forward, and despite French President Emmanuel Macron’s administration fears about this scenario. Read more

Macron fears that Bolloré, which is already building bridges between some of Lagardère’s media such as Europe 1 radio and its CNews television channel, could create a powerful conservative media group that would flood the airwaves with right-wing opinions, have already said sources at Reuters.

Spokesmen for Bolloré and Lagardère declined to comment.

Macron’s office could not be reached immediately but previously declined to comment on the matter.

VIVENDI A THREAT?

Bolloré has also had an eye on Lagardère’s publishing assets, including Hachette, sources said last year.

Arnaud Lagardère has so far welcomed the new creation of the company, saying it would help keep the group intact and focused on developing its core retail and publishing activities.

“Vivendi and Vincent Bolloré are assets for us and not a threat,” Lagardère said Wednesday at a general meeting.

The 60-year-old was elected to a new six-year term on the board, another compromise for abandoning the partnership structure in the once powerful industrial company founded by his father.

Some of Arnaud Lagardère’s shares in the Lagardère group are also guaranteed for a loan he had taken out with the Crédit Agricole bank, according to company documents. A source close to Arnaud Lagardère said the debt, initially 164 million euros, was under control. It is not clear how many are outstanding. Crédit Agricole declined to comment.

Reporting by Sarah White and Gwenaelle Barzic, Additional reporting by Mathieu Rosemain and Sudip Kar-Gupta in Paris and Julien Ponthus in London; Editing by Kirsten Donovan and Louise Heavens

Our Standards: Thomson Reuters Trust Principles.


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