Lagardère Takes Vivendi to Court over Cash Management
French media group Lagardère is taking Vivendi to court demanding that its rival return €1.6bn of cash to pay-TV channel Canal Plus (Canal+) France, in which it has a 20% share with Vivendi holding the remaining 80%.
Lagardère has long wanted to sell its minority stake, but the two groups have been unable to agree terms for its exit while unfavourable market conditions have upset plans for a possible initial public offering (IPO) of Canal+ France. The lawsuit, which evidences an escalation in their dispute, centres on a cash management agreement dating back to 2007 when Canal+ France was created and which Lagardère alleges that its rival is abusing to make permanent use of Canal+ France’s entire cash pile.
“Lagardère regrets that this situation, which was created by the Vivendi group, has caused a deadlock preventing Canal+ France, as things stand, from going ahead with an IPO in normal conditions,” stated the group.
Lagardère has asked the Paris commercial court to cancel the 2007 agreement allowing Vivendi access to the cash generated by Canal+ France and wants the funds to be returned to the pay-TV group. The group also argues that the value of Canal+ France is reduced by the cash being allocated to Vivendi rather than spent on a dividend.
A statement issued by Vivendi in response read: “The group considers that this is an attempt by the Lagardère Group to destabilise Vivendi and force it to buy back the former’s stake in Canal+ France.” Vivendi added that it plans to file a countersuit against Lagardère, accusing it of abuse of the court process.