PARIS, July 2 (Reuters) - The heir to France's Lagardere
group has ended up with a smaller than advertised stake after a
restructuring, further shrinking his sway after he gave up veto
powers that protected the firm and its influential media assets
Arnaud Lagardere effectively holds 11% of the conglomerate,
not the 14% allotted on paper to his holding company when a
previous partnership structure was finally disbanded this week,
according to two sources close to the matter and corporate
Lagardere shares closed up 6% at 22.40 euros, accelerating
their gains after Reuters disclosed the stake size, traders
said. Lagardere was the top riser on the SBF 120 index
Less than a year out from a French presidential election,
Lagardere's overhaul has made it more vulnerable to a
possible takeover that would change France's media landscape,
with Paris Match magazine, a radio station and a Sunday
newspaper among some of its prized assets.
The previously unreported smaller stake does not alter the
votes Chairman and Chief Executive Arnaud Lagardere gets in the
But it is another sign of his weakened hand. Under pressure
from personal debts and an activist campaign last year,
Lagardere sought allies, eventually bringing on board two of
France's richest businessmen and dealmakers, media tycoon
Vincent Bollore and luxury goods billionaire Bernard Arnault,
who are now investors with board seats.
"In the end, Arnaud Lagardere negotiated to keep his status
more than the economic equation," one of the sources close to
the matter said.
While Arnaud Lagardere previously only held 7% of the
company, that stake had special powers attached to it which
allowed him to block decisions.
Unravelling that structure as the new investors pushed for
more influence gave his holding company the right to double its
stake to 14%, but some of those shares are effectively owed to
Bernard Arnault, corporate statements show.
The two sources confirmed that Arnault, who already has 7%,
is entitled to at least another 3% of Lagardere as part of the
firm's conversion into a joint-stock company, and could claim
more shares should he want to cash out of the holding.
The businessman, who runs luxury goods giant LVMH,
insisted the Lagardere group mention that entitlement in recent
corporate filings, the people added, after becoming disgruntled
with how the company's restructuring turned out.
A spokesperson for Arnault's Financiere Agache investment
vehicle declined to comment.
Bollore and his Vivendi group emerged as the big winners of
Lagardere's overhaul, with a 27% stake and influence at board
Three investor and banking sources said that Vivendi was a
prime contender to launch a full takeover, especially if other
interested parties emerged, and despite fears in French
President Emmanuel Macron's administration about that scenario.
Macron has concerns that Bollore, who is already building
bridges between some of Lagardere's outlets like Europe 1 radio
and his CNews TV station, could create a powerful conservative
media group that would inundate the airwaves with right-wing
views, sources have previously told Reuters.
Spokespeople for Bollore and Lagardere declined to comment.
Macron's office could not immediately be reached but has
previously declined to comment on the matter.
VIVENDI A THREAT?
Bollore has also had an eye on Lagardere's publishing
assets, which include Hachette, sources said last year.
Arnaud Lagardere has so far welcomed the new company set-up,
however, saying it would help keep the group intact and centred
on developing its core travel retail and publishing activities.
"Vivendi and Vincent Bollore are assets for us and not a
threat," Lagardere told a shareholder meeting on Wednesday.
The 60-year-old was elected for another six-year term on the
board, another trade-off for giving up the partnership structure
at the once-mighty industrial firm founded by his father.
Some of Arnaud Lagardere's shares in the Lagardere group are
also collateral for a loan he had taken out with Credit Agricole
bank, corporate filings show. A source close to Arnaud Lagardere
said that debt, originally 164 million euros, was under control.
It is not clear how much is outstanding. Credit Agricole
declined to comment.
(Reporting by Sarah White and Gwenaelle Barzic, Additional
reporting by Mathieu Rosemain and Sudip Kar-Gupta in Paris and
Julien Ponthus in London; Editing by Kirsten Donovan and Louise