November 30, 2015 / 1:54 PM / 4 years ago

UPDATE 2-ISS opposes Vivendi's bid to win Telecom Italia board seats

(Adds details, funds’ letter)

By Maria Pia Quaglia and Stefano Rebaudo

MILAN, Nov 30 (Reuters) - Institutional Shareholder Services (ISS) has advised shareholders in Telecom Italia to vote against the proposed appointment of four new board members to represent top investor Vivendi.

Vivendi is seeking a say over strategy after building up a 20.1 percent stake in Telecom Italia and has proposed adding four seats on the board which would be taken by three of its top executives and a French consultant.

Shareholders in Telecom Italia meet on Dec. 15 to vote on Vivendi’s request as well as a plan to convert its savings shares into ordinary stock - a move that will dilute the French group’s holding to below 14 percent.

As one of the world’s top two proxy advisers alongside rival Glass Lewis, ISS can guide the voting of many institutional investors. Glass Lewis is expected to issue its opinion in the coming days.

ISS recommends that shareholders vote in favour of the savings share conversion and against Vivendi’s proposals, which entail increasing the number of board seats to 17 and allowing the four Vivendi representatives to take on roles in competing companies.

Vivendi’s board nominees are CEO Arnaud de Puyfontaine, Chief Operating Officer Stephane Roussel, Chief Financial Officer Hervé Philippe and French consultant Felicité Herzog.

Vivendi’s proposal has already caused concern among Telecom Italia’s investment fund shareholders, which control 65 percent of its share capital.

Italy’s fund association Assogestioni and some foreign funds, including Fidelity International and Standard Life Investments, have written to Vivendi Chief Executive and Chairman Vincent Bollore asking for more information.

“We’re addressing this letter to you in order to ask you to explain the concrete purposes underlying your request,” they said.

In a previous letter to Telecom Italia’s top management earlier this month, the funds expressed their concerns about Vivendi being over-represented on the board relative to the size of its stake.

Smaller Italian proxy shareholder adviser Frontis Governance is also recommending that Vivendi’s proposals be rejected, with founder Sergio Carbonara suggesting that Vivendi’s interests may clash with those of Telecom Italia as media and telecoms markets converge.

Telecom Italia is widely seen as a potential takeover target in a consolidating industry. (Writing by Valentina Za; Editing by Greg Mahlich)

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