Vivendi shares surge as media conglomerate outlines plans to split itself in three

By Louis Goss

French media conglomerate Vivendi on Thursday said it is exploring plans to split itself into three separate listed companies, causing its share price to surge.

The plans would see Vivendi break up into three independent firms, including public relations and advertising company Havas, filmmaker Groupe Canal+, and an investment company which would control its majority stake in publishing business Lagardère Group.

Vivendi's (FR:VIV) Paris listed shares surged 7% on Thursday with stock in the company having risen 8% over the previous 12 months.

In a statement, Vivendi said the plans are aimed at boosting its valuation, which has suffered in recent years, following the decision to spin out its highly lucrative Universal Music Group (NL:UMG) subsidiary via an initial public offering on the Amsterdam Euronext stock exchange in 2021.

"Since the distribution and listing of Universal Music Group in 2021, Vivendi has endured a significantly high conglomerate discount, substantially reducing its valuation and thereby limiting its ability to carry out external growth transactions for its subsidiaries," the company said.

Vivendi said separating itself in three would "fully unleash the development potential of all its activities" with all three divisions of its business "currently experiencing strong growth in an international context marked by numerous investment opportunities."

Investors in Vivendi have in the past raised concerns about a lack of synergies in the French conglomerate's business. A split that removed the conglomerate discount could see Vivendi's share price increase by around 50% to EUR13 ($14) a share, JP Morgan analysts said.

JP Morgan analysts, led by Daniel Kervan, said a split would make it easier for French billionaire Vincent Bolloré to up his stakes in any of the three newly-independent companies, for lesser amounts of money, through his family owned company Bolloré SE.

Bolloré SE first invested in Vivendi in 2011, before building up a 30% controlling stake in the conglomerate. Any split would see Bolloré SE, which is currently Vivendi's top shareholder, continue to own 30% stakes in all three newly spun out companies.

Bolloré SE's stake in Vivendi gave Vincent Bolloré a seat on the Paris firm's board and later saw him take a position as the company's chair in 2014, before he stepped down in 2019. Vincent Bolloré's son, Yannick Bolloré. is now chair of Vivendi and CEO of Havas.

Bolloré's exit from his position at Vivendi came after French authorities launched an investigation in April 2018 into allegations the billionaire's PR company, Havas, gave discount services to politicians in Togo and Guinea, in return for lucrative contracts to run ports in the countries.

Bolloré would most likely seek to build its stake in Canal+, which is currently Vivendi's main source of revenues and profit, JP Morgan's analysts said.

The split plans come just weeks after Vivendi successfully completed its takeover of rival Lagardère Group, in a deal which added publishing house Hachette to its portfolio.

Lagardère on Wednesday said Vincent Bolloré's son, Yannick Bolloré, will take a seat on its board.

-Louis Goss

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12-14-23 0611ET

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