BlackRock on Friday abstained from voting half its shares in a nasty proxy fight involving an Italian phone company — a vote that could have ousted all but one of the board of the company, Telecom Italia.
The non-votes by the investment firm headed by Larry Fink come as the board of the Rome-based telco voted to sell BlackRock 15 percent of a $1.8 billion convertible bond offering — a move that could be very profitable for the New York investment firm, sources said.
BlackRock usually follows the guidance of proxy advisory firms — which in this case supported the ouster of the board members — but in this case held back half of its votes. The portfolio managers who stand to profit from the bonds evidently overruled Fink’s corporate governance team, sources familiar with the situation said.
As recently as last week, BlackRock was expected to vote all its shares to oust the board members. Without BlackRock pushing all its votes against the board members, the move to oust them failed, 50-42.
The shareholder pushing the proxy fight, Findim, sought the vote because it felt Telefonica, a Telecom Italia rival, essentially controls the Rome company’s board and was moving to dismantle pieces of the company for its own benefit.
There were reports in the Italian media questioning whether Telefonica had some sort of deal with BlackRock over the proxy vote. In fact, talk over a possible BlackRock deal got to such a level this week that Telefonica issued a statement denying any such pact.
During the week, BlackRock added to its Telecom Italia stake, a move that has caught the eye of Italian regulators.
Consob, Italy’s version of the Securities and Exchange Commission, is probing the acquisition of those added shares to see if Fink’s firm acted on its own, or in cahoots with Telefonica or others, Reuters reported.
“If Telefonica was not on the board, the issues at Telecom Italia would remain, and a sale of [key] assets … would still be a possibility,” ISS said. “But regardless … it is clear that their majority presence on the board is not ideal.”
A BlackRock spokeswoman, speaking about Telecom Italia a few weeks ago, said, “BlackRock’s Corporate Governance team has clear policies and procedures that protect the independence of all voting decisions as well as the economic interests of our clients.”
She did not return calls after the vote.