Restructuring Mediaset Group prohibited
Outdated Auditor Statements
The summary proceedings were filed by Vivendi, which, like Mediaset Group, is active in the television industry. In 2016, Vivendi acquired an equity stake of approximately 29% in Mediaset Italy through stock market purchases. As a result of the intended legal merger, Vivendi would lose its shares in Mediaset Italy and it would receive shares of the Dutch NV in exchange. Under Dutch law, the merger proposal must set out the proposed exchange rate between the shares that the shareholders in Mediaset Italy and Mediaset Spain will lose and the shares in the Dutch NV they will receive. An auditor has to issue a letter confirming if whether or not the proposed exchange ratio is appropriate. This statement must be based on recent figures and has to be deposited together with the merger proposal. Vivendi argued that the auditor statements were outdated. The Court of Appeal agreed. Mediaset Group will have to provide updated auditor statements.
Loyalty Shares
Vivendi's second objection to Mediaset Group's merger plan has also been upheld. It was intended that a loyalty voting right scheme would apply to the group's new Dutch holding company. Following the merger, the prior shareholders in Mediaset Italy and Spain, subject to having registered their shares before the merger, would be entitled to three votes per share, to which seven votes per share would be added after five years.
The Court of Appeal finds that the shareholders would thus not be treated equally as required by Dutch law, taking into account that a company of the Berlusconi family will retain control over the Dutch NV in any event, being entitled to designate the directors of the Dutch NV. Under these circumstances, the merger proposal including a tenfold increase in voting rights is considered disproportionate, as in essence it mainly aims at providing the family company with a present economic interest of 35% absolute control over the Dutch NV.
This is the first case in which a Dutch court rules on the acceptability of loyalty voting rights in a Dutch company.
Provisional order
At the hearing, the Court of Appeal had asked the Mediaset group whether it would refrain from carrying out the proposed merger until the Court of Appeal had given its final judgment. As the Mediaset group was not willing to comply, at the end of the hearing the Court of Appeal issued a temporary order not to implement the proposed merger.