UK markets open in 2 hours 13 minutes

Spanish court upholds block on Mediaset merger plan

By Emma Pinedo and Elvira Pollina
FILE PHOTO: A man stands as a woman walks past a sign of Vivendi at the main entrance of the entertainment-to-telecoms conglomerate headquarters in Paris

By Emma Pinedo and Elvira Pollina

MADRID/MILAN (Reuters) - A regional court in Madrid has upheld the suspension of broadcaster Mediaset's <MS.MI> plan to merge its Italian and Spanish divisions under a Dutch holding company after rejecting the Italian company's appeal, a document seen by Reuters showed on Monday.

Mediaset, controlled by the family of former Prime Minister Silvio Berlusconi wants to merge its Italian and Spanish units under the Dutch holding firm MediaforEurope (MFE). It would use the new entity to pursue a European growth strategy to tackle growing competition in the industry from streaming rivals such as Netflix <NFLX.O>.

But French media group Vivendi <VIV.PA>, a major shareholder in Mediaset, is fighting the project in courts across Europe. Vivendi, led by French billionaire Vincent Bollore, says the governance structure of the new entity would strengthen Berlusconi's grip on the company.

A Spanish court suspended the merger in October as a precautionary measure after Vivendi brought a legal challenge.

Mediaset's Spanish unit Mediaset Espana <TL5.MC> appealed the suspension but the Madrid regional court rejected its appeal.

A Vivendi spokesman said the company was satisfied with Monday’s decision. Mediaset did not comment.


BUMPY ROAD

The Spanish court's decision did not consider amendments to MFE bylaws that helped Mediaset to free the project from a court suspension in Italy, the court decision seen by Reuters showed. .

But a Spanish commercial court, which will hear the wider case filed by Vivendi against the Mediaset reorganisation plan, will take MFE's bylaw changes into account when it rules on the merits of the case.

A new court hearing originally set for Tuesday in Madrid was postponed without a new date, two legal sources said on Monday.

A third source said that the court had given Vivendi up to five more days to submit further documents.

This delay poses a potential threat to Mediaset, which faces a March deadline to see its Dutch holding company plan through. If the deadline is missed, the decisions of a shareholder meeting last year that approved the project will no longer be valid under Dutch laws.

But Mediaset aims to submit revised plans, including changes to the MFE bylaws, to authorities in the Netherlands, securing more time to complete the project, two sources familiar with the matter said this month.


(Additional reporting by Paola Luelmo in Madrid. Writing by Jose Elías Rodríguez and Emma Pinedo, editing by Andrei Khalip/Keith Weir/Jane Merriman)