Tensions Rise Over Vivendi Leadership

Tensions between Vivendi Universal’s besieged Chief Executive Jean-Marie Messier and key board members reached a boiling point over the weekend, with some members renewing their calls for Messier’s resignation.

The Bronfman family, which owns 5% of the company’s shares and is its single largest shareholder, is trying to convene an emergency board meeting as early as today to take another vote on Messier’s future as head of the Paris media giant, according to a source close to the board.

The Bronfmans were livid that Messier survived a vote of confidence last Tuesday, after he garnered critical support from European board members, who were said to be reluctant to replace Messier in the absence of a strong French successor.

Messier’s future last week became even more tenuous after Bernard Arnault, a key board member and ally, resigned because of frustrations over Messier’s handling of recent decisions, including the selling of a stake in the company’s utility business and a recent complex stock repurchase deal with Deutsche Bank, which fueled concerns that Vivendi would face a cash crunch.

Last week’s meeting exposed a deep divide in the 14-member board between French and North American board members, including the Bronfmans. The family has three representatives on the board: Edgar Bronfman, former Universal Studios head Edgar Bronfman Jr. and Sam Minzberg, who represents Charles Bronfman. All five of the North American board members called for Messier’s ouster.

However, the Bronfmans and other board members believe they have enough support to oust Messier when an emergency board meeting can be called. Several board members have identified a French executive outside of Vivendi who could step in to replace Messier, according to the source.

The Wall Street Journal reported in its online edition Sunday night that some French directors were weighing nominating Jean-Rene Fourtou, the vice chairman of the supervisory board of Franco-German pharmaceutical company Aventis, to succeed Messier, at least on an interim basis. Fourtou, the Journal reported, is a respected executive in France who used to be CEO of Rhone-Poulenc before it merged in 1999 with Germany’s Hoechst to create Aventis.

Bloomberg News reported that other possible candidates include Thierry Breton, who was chosen by the French government in 1997 to turn around Thomson Multimedia, which sells RCA brand televisions in the U.S., and Thierry Desmarest, CEO of Total Fina Elf, Europe’s third-largest oil company. Breton and Desmarest have denied being approached for the job.

“There can’t be too many people knocking on Vivendi’s door these days,” Valerie Cazaban, who helps manage equity at Stratege Finance in Paris, told Bloomberg.

The Bronfman family has seen an enormous drop in the value of its holdings this year as Vivendi’s stock prices have fallen more than 60% amid concerns about Messier’s leadership, long-term strategy and the company’s debt.

Since taking the helm of Vivendi, Messier has orchestrated a series of acquisitions to transform a 149-year-old French water utility into the world’s second-largest media company. Among them was the $34-billion purchase in December 2000 of Seagram Co.’s Universal Studios and French pay television and film company Canal Plus.