Vivendi SA (VIVHY) shares slumped Tuesday after its former chairman, and one of France's richest men, was questioned by police in Paris over a corruption scandal in west Africa just days after placing his son, Yannick, at the head of the company's board.
Vincent Bollore, the billionaire media investor who also controls Bollore Groupe and remains locked in battle with U.S. activist investor Elliot Management over the fate of Telecom Italia SpA (TI - Get Report) , was held in the Parisian suburb of Nanterre, France's Le Monde newspaper first reported. He is said to quizzed over a recent article in a French magazine, Challenges, which alleged Havas, a communications consultancy also controlled by Bollore, helped influence elections in two west African countries in order to facilitate future Group Bollore business.
Bollore shares were marked 8% lower at €4.11 each in Paris trading following the reports, while Vivendi shares fell 0.95% to €20.80 each.
Bollore's arrest follows his surprise move to place his 38-year old son as chairman of Vivendi on April 19 as the media group prepares to wage a crucial shareholder vote with Elliot Management over the fate of Telecom Italia and the composition of its board on May 4.
Elliot, which owns 9% of Telecom Italia, wants to replace Vivendi board nominees with its own. Vivendi, Telecom Italia's largest shareholder with a 24% stake, has argued that Elliot is only interested in "quick fixes" at the group and has urged investors to back its own "stability and expertise".
TheDeal's Paul Whitfield noted earlier this month, however, that Bollore's plans to form a southern European media giant capable of rivalling Netflix Inc. (NFLX - Get Report) and Amazon.Com Inc. (AMZN - Get Report) has been running into recent roadblocks, even before he lifted his son to the head of the company his family founded more than two centuries ago.
"For the root of those setbacks, look no further than the Frenchman's own peculiar deal-making style," Whitfield wrote. "Bollore built much of his current business empire by pouncing on minority stakes, then using those holdings either as the launch pad for a slow-motion takeover (French advertising agency Havas SA), or as leverage through which to gain control of a company (he owns just 20% of Vivendi)."
"His efforts to replicate those strategies in Italy, where Vivendi owns 28.8% of Mediaset and 24% of Telecom Italia, have exposed their weaknesses," he added.