Italian media company Mediaset has rejected French media group Vivendi’s revised offer to acquire its pay-television operation, Mediaset Premium, amid heightened tensions between the two parties.
Vivendi this week revealed a “more ambitious” offer in its bid to acquire Mediaset Premium, one of the leading sports broadcasters in Italy.
In April, Vivendi had seemingly sealed a deal to acquire Mediaset's 89-per-cent stake in Mediaset Premium, and the remaining 11-per-cent stake held by Spanish telecommunications company Telefónica. Vivendi and Mediaset were also supposedly set to acquire a 3.5-per-cent stake in each other. The share-based deal valued Mediaset Premium at €800m ($878.4m).
Under the revised offer, Vivendi offered a 3.5 per cent stake in its business for a 20 per cent share in Mediaset Premium and a 3.5 per cent stake in Mediaset. Mediaset would have issued Vivendi with convertible bonds for the remaining amount.
However, this offer was rejected yesterday (Thursday) by Mediaset, with the Milan-based group stating it would seek damages from Vivendi and possibly consider criminal action against them for revising the terms of the deal. Mediaset said it rejected the proposal because “it is incompatible with the binding contract.”
Vivendi countered by stating it was considering suing Mediaset for defamation as its statements undermined the French group’s reputation. Vivendi claims it had warned the Italian company several times privately by letter that the terms of the deal may need to be revised. Vivendi stated on Tuesday the new conditions were due to “significant differences” it perceived in the performance of Mediaset Premium.
The Reuters news agency, citing a source close to the matter, said problems arose during further due diligence carried out by Vivendi, showing Mediaset Premium was less attractive than it had initially assessed. A separate source said one of the due diligences established that Premium’s business plan was “unachievable” and needed to be revised downwards in order to be “realistic”.
Mediaset said yesterday that Premium had lost €37m in the second quarter of the year, in line with projections. Mediaset chief financial officer Marco Giordani stated the original contract signed with Vivendi was still legally binding, but added Mediaset would be “available” for talks with Vivendi as long as the value assigned to Mediaset Premium does not change.