PARIS (Reuters) – French media group Lagardere <LAGA.PA> has extended the tenure of its top executive ahead of schedule and by four more years in the face of calls from some major shareholders for leadership and governance changes.
The surprise move, announced late on Monday, ups the stakes yet again in a confrontation between Lagardere’s bosses and activist fund Amber Capital, with two of France’s richest businessmen joining the fray this year and starting to take sides.
Shares in loss-making Lagardere, which publishes titles including Paris Match, dropped sharply in early trading on Tuesday and were down 2.24% by 1110 GMT, after the company said managing partner Arnaud Lagardere’s tenure had been renewed.
His previous six-year contract had been due to expire in March 2021.
Vivendi <VIV.PA>, a media group controlled by billionaire Vincent Bollore and which now has a 23.5% stake in Lagardere, unexpectedly teamed up with Amber in August to jointly seek four out of the firm’s nine supervisory board seats.
Vivendi and Amber now want a general shareholder meeting in the coming weeks to press their demands.
Lagardere said in a statement that the supervisory board, which includes former French President Nicolas Sarkozy, gave Arnaud Lagardere’s renewal the green light “in order to stabilise the group’s governance in a period without precedent.”
Lagardere also said the board had approved a new “strategic roadmap”, which would focus on the group’s travel retail and publishing divisions as growth drivers and be overseen by a newly enlarged management board.
A person familiar with Vivendi’s thinking said the announcements only bolstered the case for a governance rejig, without sufficiently addressing the company’s underlying issues.
“What’s urgent now is to address the financial problems of the group,” the person said.
Vivendi and Amber, which now has 20% of Lagardere, declined to comment. A spokesman for French luxury goods group LVMH <LVMH.PA> – run by billionaire Bernard Arnault, who has invested in Arnaud Lagardere’s family office – also declined to comment.
The saga has shone a spotlight on an arcane “commandite” structure allowing Arnaud Lagardere, heir to the late founder Jean-Luc Lagardere, to control the company through a holding of just 7% – one element Amber has pushed to abolish.
Lagardere said in its statement on Monday that divisions other than publishing and travel retail – which include radio stations like Europe 1 – included strong brands and would be managed “in order to optimise their value”, without elaborating.
However, the board also reaffirmed its commitment to “the integrity of the group” amid what it described as “destabilization attempts” and “dismantlement ambitions”.
(Reporting by Laurence Frost, Marc Angrand and Sarah White; Editing by David Evans and Mark Potter)