The bitter dispute between two Telecom Italia shareholders deepened today as activist investor Elliott urged shareholders to back its plan ahead of a crucial meeting this month.
US investment fund Elliott is locked in a power struggle with fellow investor Vivendi over the future of the struggling Italian telecoms firm.
The French media conglomerate is looking to take back control of the company by replacing five Elliott-appointed board members with its own candidates. But Elliott has called on shareholders to reject the nominees at a meeting later this month.
“Elliott’s presentation outlines the clear choice facing shareholders at the upcoming shareholder vote on 29 March: a choice between stability and the continued recovery of company value, or a return to Vivendi’s poor stewardship with its broken promises, track record of prolonged and pervasive value destruction, and contempt for good governance,” the company said.
The comments come as the two firms tussle over a report into Telecom Italia’s governance, which was published by the company’s statutory auditors at the end of last week.
Vivendi welcomed the findings of the report, which it said highlights serious irregularities in the governance of the company by the Elliott-controlled board.
The report states Telecom Italia chairman Fulvio Conti withheld information from Vivendi-appointed directors ahead of the ousting of chief executive Amos Genish last year.
Vivendi said the findings show the existence of a “shadow board of directors”. “These concerns reinforce Vivendi’s belief that Telecom Italia shareholders must put in place a truly independent board at the 29 March shareholders meeting,” it said.
But the report found no wrongdoing relating to nine specific allegations made by Vivendi, including that chairman Conti could no longer be considered independent.
Elliott has rebuffed Vivendi’s comments and in an interview yesterday Conti rejected claims that there had been an “asymmetry of information” ahead of the ousting of Genish.
“The decision of the board was based on facts that I presented to the whole board and not based on new information exchanged asymmetrically,” he said.
The report also found that Genish, who remains on Telecom Italia’s board, withheld information about the company’s struggling finances from other board members.
The long-running row centres on a disagreement over Telecom Italia’s strategy to reduce its heavy debt load. The company issued a profit warning earlier this year and has seen its share price drop more than 30 per cent over the last 12 months.
Shareholders will vote on the appointment of five Vivendi-nominated directors at the shareholder meeting on 29 March.