(Dec 10): French media conglomerate Vivendi SE can go ahead with a plan to spin off three multibillion-euro units next week, after shareholders voted to approve the operation at a general meeting in Paris on Monday.
Shareholders backed the plan to separately list pay-TV arm Canal+ in London, advertising agency Havas in Amsterdam, and publisher Louis Hachette Group in Paris, while the remaining Vivendi firm will stay listed in France. A first listing of shares of the three companies is expected on Dec 16.
The project to split up the company has been led by billionaire Vincent Bolloré, Vivendi’s largest shareholder through Bolloré SE with a 29% stake. Vivendi said the spinoff plan would create value for investors by reducing the conglomerate discount that has weighed on its valuation for years, while allowing the separate businesses to develop faster.
The operation is a strategic U-turn from Bolloré’s years-long project of creating an integrated European champion, with synergies between its activities. He had for years vowed to turn intellectual property such as Paddington Bear into films, books and marketing campaigns in an effort to build an empire that could rival Netflix Inc and Walt Disney Co.
All three spinoffs were approved by almost 98% of shareholders who voted in the general assembly.
Vivendi shares rose 1.7% to €8.90 (RM41.53) in Paris on Monday after the vote. The stock is down about 8% so far this year.
As the spinoffs start trading next week, each Vivendi shareholder is set to receive, for each share held, one Canal+ share, one Havas share and one Louis Hachette share, while retaining a Vivendi share. Vivendi will continue predominantly as the holding of stakes in Universal Music Group NV and Telecom Italia SpA.
Next week’s listings “will only be the start,” Yannick Bolloré, chairman of Havas and Vivendi’s supervisory board, told reporters after the meeting. The performance of the companies will be assessed by investors over the next 12 to 18 months, he added.
JPMorgan analysts estimate that Canal+ is worth about €6 billion in equity value, Havas €2.5 billion and Louis Hachette €2.2 billion, according to a note issued in November.
The plan to divide Vivendi didn’t go without hitches. The company’s share price has been declining for months ahead of the split, with concerns from analysts on performance and governance leading to questions on whether the plan would succeed in slashing the conglomerate discount.
Two activist investors proposed voting against the spinoff project. Paris-based Phitrust said that the proposal “does not provide any certainty as to the valuation of the future entity.” Its compatriot CIAM argued that the spinoff was “not in the interest of minority shareholders.”
Bolloré’s control over the firms will be reinforced under their new jurisdictions. With Bolloré’s stake in Vivendi just under 30%, buying more shares in France would have forced him under local rules to make a takeover offer. In Amsterdam, Bolloré SE will be able to buy as much as 40% of Havas without triggering a buyout, and block any hostile move from another investor.
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