Italy’s Mediaset won shareholder approval for governance tweaks needed to smooth a pan-European expansion plan despite opposition from its second-biggest investor Vivendi, which is fighting the project in court.

Fedele Confalonieri, President of Mediaset Group and Emanuela Bianchi, the group’s Head-Corporate Affairs, attended the group’s general assembly to adopt its plan for a European holding company, on Friday in Milan.

Controlled by the family of former Italian Prime Minister Silvio Berlusconi, Mediaset last year approved a plan to merge its businesses in Italy and Spain under a Dutch-based company, called MediaForEurope (MFE).

The broadcaster wants to use the new entity to pursue tie-ups in Europe to take on competition from streaming apps such as Netflix and web giants like Google. But Vivendi, led by billionaire Vincent Bollore, opposes the plan, saying the governance structure of the new entity would strengthen Berlusconi’s grip on the company.

Vivendi and Mediaset have been at odds since the French conglomerate dropped a deal to buy Mediaset’s pay-TV unit in 2016 and then built up a 29% stake in the group, which the Italian broadcaster considers hostile. Two-thirds of that stake is held in a trust following a ruling by the Italian telecoms watchdog over Vivendi’s excessive presence in the country’s media and telecoms sectors, given its 24% holding in Telecom Italia.

The trust was prevented from voting at Friday’s meeting. Following Vivendi’s legal challenge, a Spanish court has provisionally put the merger on hold, while a decision by a Milan court over the French group’s request to suspend the deal is still pending. In an effort to unblock the plan, Mediaset on Friday asked shareholders to approve changes to the bylaws of MFE suggested by the Milan court, easily winning the vote thanks to the Berlusconi family holding company Fininvest’s 45.8% voting rights.

Vivendi complained the trust’s exclusion made the approval irregular. “The new plan ... has merely removed some blatantly abusive clauses, without modifying the disproportionate rights granted to Fininvest,” it said.

Doubts over the future of Mediaset’s pan-European plan increased after Mediaset and Vivendi failed to resolve their multiple legal disputes, including the one over MFE, with an out-of-the court agreement.

Mediaset faces a March deadline to see its Dutch holding company plan through, otherwise the decisions of a September shareholder meeting that approved the project will no longer be valid based on existing Dutch laws. “If the courts rule in our favour, we can do it,” Mediaset Chief Executive Pier Silvio Berlusconi said when asked if the company was confident of completing the plan in time. The deadlock with Vivendi is weighing on Mediaset shares, which fell 5.5% in 2019 against a 27% rise in Italy’s all-share index.

An Italian court has thrown out a request by Vivendi to suspend a ruling forcing it to freeze two-thirds of its stake in Italian broadcaster Mediaset, a court document showed on Thursday.

The decision came a day before a Mediaset shareholder meeting to vote on governance tweaks to a Dutch holding company set up by Mediaset to pursue tie-ups with European peers.

Vivendi opposes Mediaset’s plans on the grounds the changes would give Mediaset’s main shareholder, the Berlusconi family, too much power.

In 2017 an Italian regulator said Vivendi’s holdings in Mediaset and Telecom Italia broke competition rules and ordered it to cut one of the stakes to below 10%. To comply, Vivendi transferred two-thirds of its almost 30% voting rights in Mediaset to a trust, which was subsequently barred from voting at the Italian broadcaster’s shareholder meetings.

The administrative court (TAR) ruling showed Vivendi had asked it to suspend the injunction ahead of Friday’s meeting on the grounds it expected Mediaset to exclude the trust.

But the judge argued, without giving further details, that there was no reason for any immediate decision since Vivendi was not at risk of irreparable damage.

According to the document, the TAR will convene a closed-door hearing on Jan. 15 to decide on the merits of the case.

In December, the EU Advocate General said the law leading to the freeze was a breach of European Union rules and last week Vivendi filed a request for the ruling to be suspended.

The French group, which owns 23.9% of Telecom Italia, has been at loggerheads with Mediaset since pulling out of a deal to buy its pay-TV unit in 2016 and then building a hostile 28.8% stake.

Reuters