PARIS (Reuters) - French media group Lagardere is suing media and telecoms group Vivendi for 1.6 billion euros ($2.2 billion) in a dispute over their Canal+ France pay-TV venture.
Lagardere wants Vivendi to return the sum to Canal+ France because it claims Vivendi is making permanent use of the business’s entire cash surplus under a disputed cash management agreement between the venture and its Vivendi-owned parent.
“Lagardere considers that the use made by the Vivendi group of this cash management agreement has caused significant harm to Canal+ France,” Lagardere said in a statement, adding that the cash pile was providing Vivendi with low-cost funding for its own goals.
Vivendi hit back, accusing Lagardere of trying to destabilize it and force it to buy back Lagardere’s 20 percent stake in Canal+ France. Vivendi owns the remaining 80 percent as well as all of parent company Canal+ Group.
“The group has asked its lawyers to file complaints of abuse of legal process and will also seek damages, which it is currently evaluating,” Vivendi said in a statement.
The legal challenge by Lagardere comes after the two companies failed to reach agreement on the ownership of Canal+ France in recent years.
Lagardere has been promising investors for several years that it would seek to sell its non-media assets, including the Canal+ France stake, with divestments seen as key to the investment case for a company.
Vivendi and Lagardere have held talks about Vivendi buying Lagardere’s stake, but were unable to agree on a valuation. Lagardere also attempted to list the stake in 2011, but abandoned the move because of market volatility following the Fukushima nuclear disaster in Japan.
Lagardere said in November it would try again to list the stake in the first half of this year, but the company said on Wednesday that the dispute with Vivendi put a question mark over its plans.
“Lagardere regrets that this situation, which was created by the Vivendi group, has caused a deadlock preventing Canal+ France ... from going ahead with an IPO in normal conditions,” Lagardere said.
The company said it has summoned Vivendi and Canal+ Group to appear in the Paris commercial court on March 21. Vivendi said it “vigorously contests” Lagardere’s claims.
($1 = 0.7427 euros)
Reporting by James Regan; Editing by David Holmes