LVHM Chairman Leaves Vivendi

LVMH chief Bernard Arnault quit the board of struggling media company Vivendi Universal Tuesday, stripping Chairman Jean-Marie Messier of an ally ahead of a crucial board meeting.

Arnault's resignation is the latest sign of the high-level conflicts over corporate strategy at Vivendi, whose share price hit 13-year lows Monday after it unveiled plans to sell one-third of its stake in utility company Vivendi Environnement.

The sale of up to 15.6 percent was part of a two-step process to dilute Vivendi Universal holdings in the utility company from 63 percent to 42 percent.

The sale shaves $1.65 billion off Vivendi Universal's $32.4-billion debt. However, it was widely interpreted as a sign that Vivendi Universal needs quick, short-term cash.

Vivendi's board was expected to meet Tuesday afternoon to continue wrangling over the company's direction.

Arnault had been seen as a key ally of the flashy but embattled Messier and as a counterweight to some U.S. directors with qualms about the leadership of Messier.

Messier moved to New York and embarked on a campaign to increase the company's U.S. presence with acquisitions that are blamed in part for the heavy debt load.

Messier serves on LVMH's board, but both companies declined to comment on whether he would step down from the luxury goods group.

The French daily Le Parisien reported Tuesday that Arnault wrote to Messier on several occasions recently seeking clarification about Vivendi Universal's strategy. The paper added that Arnault had become increasingly concerned with general corporate governance issues in the wake of the Enron Corp. scandal in the United States.

The negative reception to Vivendi's plan to reduce its stake in Vivendi Environnement was compounded by press reports suggesting media mogul Rupert Murdoch's News Corp. is having second thoughts about a deal to buy Vivendi's struggling Italian pay-TV operation Telepiu after failing to find investors willing to share the $1.5 billion price tag.