Vivendi activist’s critique falls on deaf ears
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Johnson
LONDON, Nov 1 (Reuters Breakingviews) -Vivendi VIV.PA is no stranger to a fight. It’s fitting, then, that one last brawl should erupt just weeks before a Dec. 9 shareholder vote on whether to break up the 10-billion-euro media conglomerate. French activist CIAM reckons the planned three-way split favours Vivendi’s controlling Bolloré family. That’s true. But minority investors have little chance of a getting a better deal from the infamously cunning clan.
The Paris-based group said in July that it would spin off three of its businesses to help shed what it has in the past called a “significantly high conglomerate discount”. Under the plan, pay-television business Canal+ and advertising firm Havas will list in London and Amsterdam, respectively. Meanwhile, publisher Louis Hachette Group will trade on Euronext Growth, the Parisian junior exchange. The Bolloré family vehicle, by virtue of its Vivendi stake, would own roughly 31% of each of the newly listed entities.
It doesn’t take a conspiracy theorist to see why the family of tycoon Vincent Bolloré would choose these specific listing venues. Start with Canal+. UK law, like in most countries, ordinarily asks shareholders acquiring over 30% of voting rights in a listed company to produce a public takeover offer. But because the pay-TV group will remain incorporated in France, this rule doesn’t apply. The upshot is that the Bollorés can in theory list the business in London and subsequently increase their control without making a proper offer.
It’s a similar story in the Netherlands, where an investor with 30-50% of a company’s stock at the time of listing doesn’t have to make a public bid. Meanwhile, Euronext Growth has a 50% threshold for mandatory offers. Viewed through this lens, then, the whole project effectively allows the family to boost their control of three of Vivendi’s key assets without making a bid for the whole company.
CIAM wants other minority investors to vote against this plan. According to a source familiar with the matter, the activist fund wants the Bollorés to either make a full takeout bid for Vivendi or list the entities on the main French market, ensuring governance protections.
Yet the Bollorés’ plan probably offers just enough to keep investors on side. JPMorgan analysts estimate that Vivendi’s shares are currently struggling under a conglomerate discount of 35% to 45%. Post-split, the bank reckons the three new entities would only have a 15% governance discount instead. In other words, there’s value to be realised in the breakup – even though it’s highly imperfect.
And if shareholders vote down the plan, it’s not clear why the Bollorés would go ahead with CIAM’s favoured alternatives. The family doesn’t exactly have a reputation for charity. This looks like yet another fight that Bolloré will win.
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CONTEXT NEWS
Activist investor CIAM, which holds a stake of less than 1% in Vivendi, said on Oct. 29 that it would appeal to the French financial watchdog to ensure that minority shareholders are protected in the company’s impending breakup.
Vivendi has proposed splitting into three separate entities: television group Canal+, advertising firm Havas and publisher Louis Hachette Group. The new companies would be listed in London, Amsterdam and Paris, respectively.
Vivendi’s shareholders are due to vote on the plan on Dec. 9.
Graphic: Vivendi shares vs. European media index https://reut.rs/48uIgVi
Editing by Liam Proud and Oliver Taslic
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