Shares in Berlusconi firm Mediaset jump as Vivendi eyes big stake

Shares in Mediaset surged in Milan Tuesday after French media conglomerate Vivendi said it was pushing to raise its stake in the Italian TV company.

Vivendi, led by corporate raider Vincent Bollore, said Monday it would increase its Mediaset holding to up to 30 percent from 20 percent now, market conditions permitting, in a strategy that has raised fierce resistance from the Italian TV company.

In late morning Milan trading, Mediaset shares were 18 percent higher, vastly outperforming the market's main index which was up by around 0.5 percent.

Vivendi took its current stake in Mediaset, which is controlled by former prime minister Silvio Berlusconi's family, last week in a lightning move which the family -- and the Italian government -- have called "hostile".

- 'Market manipulation' -

On Monday, Berlusconi's company Fininvest said it had filed a complaint with Italian financial markets watchdog Consob against Vivendi for "market manipulation and abuse of privileged information".

This follows criminal proceedings Fininvest brought last week against Vivendi at a Milan court.

To counter the French company, the Berlusconi family last week bought more shares in Mediaset, raising their stake to 38.3 percent from just under 35 previously.

Vivendi executive board chief Arnaud de Puyfontaine denied that his company's intentions were aggressive.

"This is not an escalation by the French aiming to conquer an Italian crown jewel," he told daily Corriere della Sera in an interview published at the weekend.

But analysts said that relations between Vivendi and Mediaset are clearly unfriendly, after tensions erupted over Vivendi dropping a plan to take over Mediaset's Premium pay-TV channel.

- 'More brutal' -

"A new game is beginning and it's getting more brutal," said one source close to the matter after Vivendi's surprise purchase of its current stake.

Late Monday, Fininvest called Vivendi's announcement part of a "very aggressive strategy".

In a statement Fininvest said that Vivendi's every action confirmed "all the irregularities and serious violations that Fininvest has highlighted".

Fininvest's current legal action would be followed by further criminal, civil and administrative proceedings, it said.

The Italian government wants operations between Vivendi and Mediaset to be "clear", Italian Infrastructure Minister Graziano Delrio said, also on Monday.

"But there is little clarity," he said.

Vivendi's charge on Mediaset is being led by supervisory board chairman Bollore, an experienced corporate raider, who has said he hopes to create a southern European media behemoth. Analysts said this could possibly also involve Telecom Italia in which it holds more than 24 percent.

They said Vivendi may be aiming for a seat on the board of Mediaset to force the Italian company's cooperation, although Vivendi said last week that it was "too early" to talk about a director's seat.

Vivendi's plan to stop short of 30 percent in Mediaset probably means that the French company does not plan a full takeover bid which would, according to stock exchange rules, be triggered automatically once that level is breached, analysts said.

But they warned that Vivendi's influence would still be huge.

"With this stake, Vivendi could block any mergers in the general shareholders meeting, and could also call a meeting to propose changes on the company's board," said analysts at the Equita brokerage.

Mediaset meanwhile hopes that its legal action will lead to Vivendi's voting rights to be frozen.

Vivendi spent about 800 million euros ($830 million) on its first 20 percent in Mediaset, and the next 10 percent will cost it about the same due to the sharp rise in the Italian company's share price, analysts said.