MILAN (Reuters) - A judge ruled in favor of an appeal by Telecom Italia (TIM) and its leading investor Vivendi to block a vote on some board director replacements proposed by activist fund Elliott at an April 24 shareholders meeting, a court document showed.
Elliott and the French investor were meant to face off for the first time at the Tuesday shareholder meeting, although the two have been in a heated exchange for weeks.
TIM will still hold its AGM on Tuesday to approve financial results for 2017 and confirm Amos Genish as chief executive, but the standoff over the board seats will now be delayed to another shareholder meeting scheduled for May.
Paul Singer’s fund had called for six Vivendi-nominated board members, including TIM Chairman and Vivendi CEO Arnaud de Puyfontaine, to be replaced with well-known Italian business leaders to help improve governance and strategy.
But following Elliott’s move, eight board members nominated by Vivendi resigned, triggering a vote on a full board renewal at a separate shareholder meeting called for May 4.
Despite the resignations, TIM’s statutory auditors included Elliott’s proposal on the agenda for this week’s meeting - a decision TIM’s board and Vivendi had challenged in court and which the judge suspended with its ruling.
Explaining the decision, the judge said the mass board resignations made it necessary for shareholders to elect an entire new board rather than vote on partial changes that would be temporary.
Elliott said the ruling was “merely democracy delayed, not democracy denied” and added shareholders would get to express their will in May. TIM said the motions proposed by Elliott would not be discussed on Tuesday and confirmed the May meeting.
Vivendi declined to comment.
Since first becoming a shareholder in TIM in 2015, Vivendi has increasingly tightened its grip on the former state phone monopoly and appointed two-thirds of its board last year.
The hands-on approach has led to frictions with Rome, concerned about an asset it considers of strategic importance, and has also unnerved other investors at the telecoms group.
Elliott has said TIM’s share price, strategy and valuation had suffered under Vivendi’s leadership and accused the French media group of only serving its own interest.
Vivendi, which owns 24 percent of TIM, asked investors to trust its long-term strategy, saying it provided “stability and expertise” to the Italian phone firm, in contrast with Elliott’s “quick fixes”.
In May, shareholders will be asked to pick between Elliott’s slate of 10 independent Italian business heavyweights and Vivendi’s list, that did little to allay governance concerns.
The French investor changed a few names on its slate and kept de Puyfontaine as candidate for TIM chairman, albeit this time in a non-executive role.
Vivendi’s chances of securing a board majority are fading, especially after three proxy advisors recommended backing Elliott’s candidates ahead of the April vote, saying the French group had been damaging for governance and shareholder returns.
However, by postponing the vote to May, Vivendi is assured at least five seats on the new board because shareholders will vote on its candidates as well and not just replacements proposed by Elliott.
TIM shares were down 0.1 percent by 1359 GMT, in line with the Milan blue-chip index .FTMIB.
Additional reporting by Manuela D'Alessandro; Editing by Keith Weir and Alexander Smith