Italian Prosecutors Probe Vivendi Over Alleged Stock Manipulation (Report)

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Vivendi's Vincent Bollore

The French media giant is under investigation for alleged market manipulation over a deal with Italian broadcaster Mediaset.

According to Italian media reports, Vivendi head Vincent Bollore and CEO Arnaud de Puyfontaine are being investigated by Milan prosecutors for possible market manipulation, turning a very messy financial dispute into a criminal case.

Last December, Vivendi increased their holdings in Mediaset to 28.8 percent (with voting rights of 29.94 percent) becoming the second-largest shareholder after Silvio Berlusconi’s Fininvest increased their shares to 40 percent in an effort to fend off the French attack.

The Berlusconi family accused the French company of withdrawing from a previous deal, which would have seen Vivendi purchase pay TV outlet Mediaset Premium and exchange for a 3.5 percent equity stake, in order to lower the value of Mediaset shares and purchase them at a discounted price. Since the European deal fell through last July, Mediaset shares have been on a roller-coaster ride on the Milan Stock Exchange.

Mediaset has hit back hard, reporting the matter to the state prosecutors, as well as the Italian Securities and Exchange Commission (CONSOB) and Communications Authority (AGOM).

“This is a case of blackmail, of extortion: we do not intend to take this aggressive raid lying down, and we believe that the judiciary should acknowledge our complaints, and rule in our favor,” said Berlusconi back in December.

“The registration of Vivendi Executives by the Milan public prosecutor is the result of an unfounded and abusive lawsuit filed by the Berlusconis against Vivendi after the increase of its stake in Mediaset,” Vivendi responded in a statement Friday. “This does not in any way signify any accusation against any person.”

The Mediaset-Vivendi merger was planned to create a European media powerhouse before it fell through. Fininvest and Mediaset sued Vivendi for backing out of the deal, but Vivendi claims their move was warranted.

“We realized that what we had signed was different to what we had been told. It is as if we had been invited to dinner at a three-star restaurant and then ended up being taken to McDonald’s,” said de Puyfontaine. Mediaset in turn said their accusations were completely without merit. The two companies have since gone back and forth in a very public and bitter battle.

Vivendi, also owner of Universal Music Group and French TV channel Canal Plus, and a majority owner of Telecom Italia, has made it clear that they intend to expand their media empire with or without Mediaset’s cooperation.