PARIS – French publishing and retail group Lagardère said on Wednesday it has reached an agreement with shareholders to give up the governance system that has long granted chief executive officer Arnaud Lagardère full control of the company, defusing a battle between French billionaires Bernard Arnault and Vincent Bolloré over control of its media assets.
Arnaud Lagardère has agreed to dissolve the structure, known as a société en commandite par actions (SCA), and replace it with a joint-stock company. In exchange, he will receive 10 million new shares, equivalent to 7 percent of the company’s capital after their issuance, and will be named chairman and CEO for a six-year term.
“The proposed governance structure is intended to ensure management continuity for the Lagardère group around Arnaud Lagardère’s leadership, and representation of the main shareholders on the board of directors,” Lagardère said in a statement.
The deal staves off the prospect of a dismantling of the group, the parent of publishing companies grouped under the Hachette Livre division; a travel retail division, and media interests including Europe 1 radio, Le Journal du Dimanche (JDD) newspaper and Paris Match magazine.
Lagardère has been battling efforts by activist investor Amber Capital and Vivendi, a media group controlled by Bolloré, to gain board representation. In a bid to reinforce his position, he enlisted Arnault, chairman and ceo of luxury conglomerate LVMH Moët Hennessy Louis Vuitton, to buy shares in Lagardère last year.
That strategy appeared to backfire, as Arnault and Bolloré squared off, with Bolloré reportedly interested in acquiring control of Hachette Livre and Europe 1, and Arnault seen circling JDD and Paris Match. LVMH already owns newspapers Les Echos and Le Parisien.
“Any disposal of publishing, travel retail or media assets representing revenue exceeding a threshold set for each of these activity groups, would require the authorization of the board of directors, based on a three-fifths majority of its members,” Lagardère said.
Under the terms of the deal, all the main shareholders will be represented on the board. Arnaud Lagardère and Vivendi will each propose three directors. Qatar Holding LLC and Amber Capital will each have the right to name one director, and Financière Agache, the holding company controlled by Groupe Arnault, will submit one independent director.
Pierre Leroy will be named deputy ceo “with added focus on operational excellence and cash generation,” Lagardère said. The proposal has been approved by the supervisory board of Lagardère, and will be submitted to shareholders at the annual general meeting on June 30.