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U.S. hedge fund criticizes Vivendi over Bollore role

Vincent Bollore (L), the current vice-chairman of Vivendi and largest shareholder, attend the company's shareholders meeting in Paris, June 24, 2014. REUTERS/Benoit Tessier

PARIS (Reuters) - U.S. hedge fund P. Schoenfeld Asset Management (PSAM) has accused French media group Vivendi of giving too much leeway to chairman and largest shareholder Vincent Bollore to boost his stake at "undervalued prices".

PSAM, which says it owns 0.8 percent of Vivendi, is trying to rally other shareholders to vote for two resolutions at an upcoming annual meeting that would require Vivendi to boost returns to shareholders to 9 billion euros ($9.8 billion) after asset sales left it with a pile of cash.

In Monday's statement, PSAM took aim at billionaire businessman Bollore, saying he was putting his own interests above those of other shareholders.

Bollore on Thursday said he had bought additional shares in Vivendi worth 632 million euros ($687 million) to take his stake to 10 percent from 8 percent previously.

"PSAM is concerned that such opportunistic purchases by Bollore Group cede de facto control of Vivendi to Bollore Group or Mr. Bollore without having to pay the silent and disenfranchised majority investors a control premium for their shares," PSAM said.

A spokesman for Bollore had no immediate comment. Vivendi declined to comment.

On Friday, Vivendi warned PSAM in a letter that if it joined forces with other shareholders, it could be in breach of French law, which bans foreign ownership of TV broadcasters of more than 20 percent. Vivendi has a license issued by the state to operate pay-TV channel Canal Plus.

PSAM is mounting the first direct challenge to Bollore's power at Vivendi since he became chairman in September 2013.

The French tycoon has overseen a radical slimming down of the company in the past two years, in which time it has sold four of six divisions, exited telecoms and amassed a cash pile which stood at 4.6 billion euros at the end of 2014.

Vivendi said in April it planned to pay out 5.7 billion euros to shareholders in dividends and buybacks by 2017, but wanted to keep some cash to build itself into a stronger media company via organic growth and acquisitions. It now owns two media businesses, the world's biggest music label Universal Music Group and Canal Plus.

"By not distributing adequate cash to shareholders and providing vague guidance about Vivendi's acquisition plans, Mr. Bollore and Vivendi's Management Board are asking investors to have blind faith in their plan for the company's future," said PSAM.

The fund also opposes Vivendi's plan to buyback shares only when the price is below 20 euros, and analysts have also criticized the position as making the buy backs uncertain.

Vivendi shares were up 1.4 percent to 23.01 euros at 0757 GMT, within a French blue-chip index up 1.2 percent.

($1 = 0.9201 euros)

(Reporting by Leila Abboud; Editing by Andrew Callus and Mark Potter)