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Telecom Italia -4.7% as board tension ratchets up

Mar. 12, 2019 12:05 PM ETVIVEF, VIVHY, BOIVF, BOLRF, BLLRF, TIIAYBy: Jason Aycock, SA News Editor
  • Telecom Italia (TI -4.7%) has tumbled today amid ongoing tension in the battle for the company's board.
  • An annual general meeting coming at the end of the month presents high stakes again, after Elliott Management wrested control of the board last spring from top shareholder Vivendi (VIVHY +0.3%).
  • Since then, shares have declined, and Vivendi has been sharply critical of Elliott's approach and is now pressing to replace five Elliott-backed boardmembers.
  • Proxy adviser Institutional Shareholder Services is recommending a vote against Vivendi, Bloomberg reports.
  • "Vivendi hasn’t presented a substantive argument related to performance beyond noting the significant stock price decline since last year’s AGM,” ISS says, adding that the governance track record of Vivendi's controlling shareholder, Bollore (BOIVF +1.4%), is "far from ideal" and "far below French market standards."
  • Vivendi's past actions undermine moral authority in this case, ISS adds, and stock underperformance may be due more to a hot competitive environment and expensive spectrum auction.
  • Meanwhile, UBS says "the only way forward" is some kind of compromise between Vivendi and Elliott.

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