By Nick Kostov 

PARIS--Police raided the Paris headquarters of Vivendi SA, the French media company controlled by business tycoon Vincent Bolloré, in connection with an investigation into alleged market abuse by the French firm when it bought a stake in Italy's Mediaset SpA last year.

The raid, confirmed by a Vivendi spokesman on Thursday, is the latest development in a long-running wrangle that has pitted Mr. Bolloré against the family of former Italian Prime Minister Silvio Berlusconi whose holding company Fininvest owns 41% of Mediaset.

Milan prosecutors are investigating Vivendi after it accumulated Mediaset shares on the open market last December, eventually spending EUR1.26 billion for an almost 30% stake. Fininvest has accused Vivendi of first undermining investor confidence in Mediaset before then buying up its stock on the cheap.

Vivendi's spokesman declined to comment about the nature of the documents that were seized. Vivendi "acquired its stake in Mediaset totally legally and transparently and remains absolutely confident in the conclusion of this disagreement," the company said. Mediaset declined to comment.

The high-stakes corporate standoff has pitted two of Europe's biggest and best-known media players against each other. Some analysts say the outcome could go some way to determining the future of both companies.

Mr. Bolloré, Vivendi's chairman and its largest shareholder, is trying to refashion the unwieldy conglomerate into a more focused media company--pay-TV, videogames, and music--with a large presence in southern Europe.

Mediaset remains a giant of Italian TV, but is struggling for ways to stay ahead of local and international competitors as internet-streaming services eat away at incumbent broadcasters' audiences and advertising revenues.

Vivendi and Mediaset weren't always at loggerheads. In April last year, Vivendi agreed to buy a small stake in Mediaset and acquire its premium pay-TV unit in return for Mediaset taking a small stake in Vivendi. Shortly afterward, the two sides fell out publicly over the performance of the Mediaset business, with Vivendi pulling out of the deal, a decision which sent Mediaset's share price tumbling.

Then, in December, Mr. Bolloré disclosed that Vivendi had after all acquired a 3% stake in Mediaset, a prelude to building up a large shareholding in the company.

Mediaset accused Vivendi of attempting a hostile takeover, and lodged a criminal complaint in Milan against the French company for market manipulation. Vivendi described the lawsuit as "unfounded and abusive".

Despite the criminal complaint, people familiar with the matter have repeatedly said that both sides still want a friendly deal.

"There are many reasons why it's a win-win situation for both companies to resolve this conflict," Vivendi Chief Executive Arnaud de Puyfontaine told The Wall Street Journal earlier this year.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

October 05, 2017 10:53 ET (14:53 GMT)