Published on Dec 14 2023 at 9:05Updated Dec 14 2023 at 10:09
The information came quite late yesterday, Wednesday, shortly before 8:30 p.m., via a press release which, however, is very important. As the group prepares, Monday morning, to re-enter the Cac 40, Vivendi announced that it is studying a project to split its activities into several entities, which would be listed, with the aim of making up for a conglomerate discount considered very high, “ significantly reducing its valuation and thus limiting its capacity to carry out external growth operations for its subsidiaries “.
The announcement hit the stock market. After being reserved for an increase, Vivendi climbed more than 10% this Thursday.
More concretely, the operation would involve the creation of three distinct entities, structured around Canal+, Havas, both thus making their return to the stock market, and finally an investment company holding listed and unlisted financial stakes in the sectors culture, media and entertainment. It would notably include the majority stake in the Lagardère group.
13 to 15 euros per share, according to Oddo BHF
This split project would give all activities the human resources and financial agility necessary for their development, Vivendi believes in its press release, Canal+, like Havas or Lagardère “ know[ant] strong dynamism today, in an international context marked by numerous investment opportunities. » Also in the background, the desire to bring cash back to shareholders, including Vivendi and the Bolloré group.
For Invest Securities analysts, the news is positive. “ Certainly, Vincent Bolloré will never cease to surprise, the project presented being the opposite of the rumors of simplification of the galaxy of structures of the groupanalyzes the research office before the markets open. It is, however, clear that the operation would crystallize the value of C+ and Havas, a bit like UMG. The upcoming project will need to be specified and it is however likely that the third entity will be much less valued, but the total amount should have a significant impact on the valuation. »
Return of cash to shareholders
Oddo BHF goes a little further, with a first estimate of valuation of between 13 and 15 euros per share at the end of this operation, against a final closing price of 8.95 euros, the discount being currently strong, of the order by 48% according to the analyst firm. “ The scenario of a public offer for the entire group is therefore no longer relevant, but this new plan seems more favorable to us in terms of value creation, says Jérôme Bodin, at Oddo BHF. The valuation of this strategy could come to 15 euros per share, particularly if UMG’s stake is sold quickly and the cash returned to shareholders. »
Concerning this strategy of returning cash to shareholders, this could go through two routes, Oddo BHF further estimates: “ 1/ a distribution of Havas and Canal+ Group shares to current Vivendi shareholders via a dividend in kind, as was the case for UMG in 2021. The question is to know what percentage of the capital could be distributed; 2/ a (dilutive) merger operation with a competitor. This would make it possible to reduce the participation of the remaining entity Vivendi in the new group. This pattern could be followed by Havas, which could try to get closer to a competitor like WPP, Interpublic or Omnicom. It is therefore possible that the current Vivendi structure will continue to exist and still hold a stake in the new entities. »
The merger-absorption of Vivendi and Canal+ took place in December 2000 to give birth to Vivendi Universal, before the split of Universal Music Group (UMG), approved at the general meeting in June 2021. Canal+ entered the Cac 40 in May 1990. Privatized in 1987 and in the flagship index since the index’s creation, the communications agency was bought by Vivendi in 2000.