The board of directors of Lagardère has renewed the contract of chief executive Arnaud Lagardère seven months ahead of schedule, extending his tenure for four years as he battles to keep control of the French publishing and retail group founded by his father.
The surprise announcement late on Monday is important because of Lagardère’s distinctive governance and legal status as what is known as a société en commandite par actions under French law. It gives Mr Lagardère a highly protected position and broad powers despite only owning 7.2 per cent of the share capital.
Crucially under the commandite structure, shareholders cannot easily remove the general partner, Mr Lagardère, as they could in a normal company. His mandate goes to vote for renewal every six years by the board.
It was supposed to be up for renewal in March 2021, but the board has moved to secure it early. The move, it said, was intended to “stabilise the governance in an unprecedented period” as the Covid-19 pandemic hurt revenues and to “give visibility to managers, staff, and other stakeholders”.
In reality, the move appears to be a reaction to gathering threats to Mr Lagardère and his company. It has been embroiled in a long-running battle with activist investor Amber Capital, and now faces a challenge from France’s fiercest corporate raider, Vincent Bolloré. Since May, he has used Vivendi, the media group he controls, to build up a 23.5 per cent stake in Lagardère, which is now worth roughly €500mn.
Mr Bollore’s Vivendi further ratcheted up the pressure on Lagardère last week by signing a rare pact with Amber under which they agreed to seek seats on Lagardère’s board together, among other measures. The two then planned to wage a campaign to convince the board not to renew Mr Lagardere’s mandate as gérant, or general partner, of the company, according to people familiar with their strategy.
That may be harder to do now that the board has pre-empted the nomination process. A spokesperson for Lagardère confirmed that the board’s vote on the matter was unanimous.
“They saw our pact and rushed to renew him,” said Amber’s founder Joseph Oughourlian, referring to Mr Lagardère. “Outrageous but unsurprising from this board.”
Mr Bolloré has taken the gloves off in what he and Vivendi initially in April billed as a friendly investment intended to help Lagardère fend off a shareholder vote brought by Amber to replace the board.
People familiar with the situation say the billionaire was incensed by how Mr Lagardère had brokered a deal in May with France’s richest man, Bernard Arnault, the founder of LVMH.
That deal will see Groupe Arnault pay about €80m to buy 25 per cent of Mr Lagardère’s personal holding company through which he controls Lagardère and the commandite. It also made Mr Arnault a powerful player at the company, arguably with more influence than Vivendi as he was investing alongside the heir.
“The supervisory board has also reiterated its attachment to the Lagardère group as an integrated entity, and stated its acute focus on any attempts to destabilise the group’s governance or intentions to dismantle it,” the company said in a statement.
Vivendi declined to comment.
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Lagardère board extends tenure of embattled CEO as threats gather - Financial Times
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