Telecom Italia to take legal action to stop Elliott

Bloomberg

Telecom Italia SpA’s board said it will take every legal action necessary to block activist investor Elliott Management Corp. from pushing ahead with its own slate of directors at the company’s next shareholder meeting.
Elliott, Telecom Italia’s second-biggest shareholder after Vivendi SA, wants to replace six Vivendi-backed directors at Italy’s former phone monopoly with its own candidates at the company’s annual general meeting set for April 24. In a statement, Telecom Italia criticized its auditor’s decision saying that vote should go ahead.
Telecom Italia’s board will seek an order from an administrative court to block Elliott from putting its proposal to a shareholder vote at that meeting, said people familiar with the matter who asked not to be identified as the matter is private.
Vivendi sees a better chance of winning a fight with Elliott over the board’s makeup if it can delay the face-off until May 4, when investors will also have a chance to vote on a full slate from the French media conglomerate, the people said. Vivendi’s list includes Telecom Italia’s current chief executive officer, Amos Genish, who has said he has the backing of several funds.
The Italian funds association Assogestioni, which typically presents its own list of candidates, won’t this time, the group said in a statement.
The legal action, which could drag on for months, risks further clouding the carrier’s ownership and strategy. Elliott, the fund run by billionaire Paul Singer, disclosed that it had boosted its stake in Telecom Italia to 8.8 percent.
The New York-based hedge fund last month took on Vincent Bollore’s media company by calling for the board shakeup and a breakup of the Italian phone company.
A representative for Elliott declined to comment.
Delaying the vote would go against a determination by Telecom Italia’s own auditors, who agreed last month that Elliott’s proposal to replace the Vivendi directors should be heard at the April meeting. The auditors’ move thwarted an earlier attempt by Vivendi to delay the showdown, by having seven Telecom Italia directors it supports resign at the annual meeting to dissolve the board before a May 4 vote. The current Telecom Italia board thinks the auditors made legal mistakes in their decision and weren’t justified in overriding the board, the people added.
Telecom Italia said in the statement that the auditors’ decision was “erroneous and particularly serious.” The company argued that Elliott’s proposal was superseded by the resignation of the majority of the board. It said it plans to proceed with the May meeting and to disassociate itself from the auditors’ decision.