France’s business elite closed ranks around publishing group Lagardere (PA:LAGA) on Monday with LVMH’s Bernard Arnault and Vivendi ‘s (PA:VIV) Vincent Bollore swooping in to bolster its defences against London-based hedge fund Amber Capital.
Arnault, France’s richest man, has bought a 25% stake in Lagardere Capital & Management (LCM), the personal holding company of Arnaud Lagardere, the heir of founder Jean-Luc Lagardere. The move shores up its finances after LCM’s debts exceeded the value of its 7.3% stake in the Lagardere Group.
A source familiar with Arnault’s purchase said it cost less than 100 million euros ($109 million) and was driven by his friendship with Jean-Luc Lagardere, who died in 2003.
Bollore’s Vivendi, meanwhile, increased its stake in Lagardere SCA to 16.48% making it the second-largest shareholder after activist fund Amber Capital, which last month failed to shake up the so-called “commandite” governance structure, which concentrates power in the hands of Arnaud Lagardere.
Bernard Arnault and Arnaud Lagardere had told Vivendi about the move, a source close to Vivendi said.
“Vivendi welcomes Bernard Arnault’s arrival very positively. It is a friendly approach and shows that he believes, like Vivendi, in the future of the Lagardere group’s activities”, the source said.
Lagardere’s business is focused on book publishing houses including Hachette, the world’s third largest book publisher, and travel retail, with stores in airports and train stations.
Bollore already owned more than 13% of Lagardere SCA via Vivendi and analysts said that he and Arnault may be eying Lagardere’s assets.
For Vivendi this could be media and entertainment assets and for Groupe Arnault, a partnership in travel retail, they said.
“The deal further reduces the likelihood that the “commandite” structure will be dismantled as it solves the potential solvency issue that Arnaud Lagardere was facing,” Kepler Cheuvreux analysts wrote in a note.
“We believe Vivendi and Groupe Arnault will try to accelerate Lagardere’s refocusing strategy while eying some assets,” the analysts said.
Shares in Lagardere closed up 16.15% at 13.02 euros.
Lagardere has been locked in a battle with Amber Capital for four years. The hedge fund has raised its stake in Lagardere to 18% in recent weeks, but Lagardere shareholders this month rejected the activist investor’s call to replace Lagardere’s supervisory board.
Amber declined to comment on Arnault and Vivendi’s moves.
Lagardere has long been under fire for its sprawling business mix and for underperforming on the stock market.
The link-up between Groupe Arnault and LCM will “strengthen the corporate structure and financial capacities of LCM. The family groups led by Bernard Arnault and Arnaud Lagardere will act in concert with regard too Lagardere SCA,” the statement said.
($1 = 0.9172 euros)