Tags: Vivendi | Stock | music | overhaul

Vivendi Said to Weigh Overhauling Structure to Revive Stock

Thursday, 26 April 2012 09:55 AM

Vivendi SA is considering an overhaul of its company structure that may lead to a breakup of the owner of the world’s largest music and video-game companies, according to people with knowledge of the matter.

One option under discussion is to split the Paris-based company into two, with one part incorporating media assets such as Universal Music Group and video-game maker Activision Blizzard Inc., said the people, who asked not to be identified because the deliberations are private. The other would include Vivendi’s telecommunications and content distribution units, they said, adding that the internal review is at an early stage.

Vivendi’s supervisory board, led by Chairman Jean-Rene Fourtou, is seeking to reverse a slide in the company’s stock and reduce a discount he puts at almost 40 percent because of the way Vivendi is structured as a holding vehicle of multiple units. The board is due to discuss the alternatives during a three-day summit with top executives in June, one person said.

Other options may include a partial or complete spinoff of pay-TV operator Canal Plus, which is 20 percent owned by publisher Lagardere SCA, the people said.

Changes in top management may also be announced after the meeting, one of the people said.

Shares Jump

Vivendi surged as much as 8.1 percent to 14.41 euros, the steepest intraday increase since December 2008. The stock traded 5.3 percent higher at 14.04 euros as of 9:09 a.m. in Paris. The stock fell 21 percent this year through yesterday, the worst performance in France’s benchmark CAC 40 Index.

A Vivendi spokesman said the company vigorously denies having the intention to separate from Canal Plus. He said there has been no decision on a review of corporate structure and referred to a letter to shareholders on March 27.

In the letter looking into the reasons for a “disappointing” stock performance, Chief Executive Officer Jean-Bernard Levy said Vivendi’s portfolio of assets made sense, though he said the board “regularly posed the question of the group’s perimeter.”

Levy last year spent 7.95 billion euros ($10.5 billion) to take full control of French mobile-phone company SFR. Vivendi’s largest division has seen its earnings decline as new operator Iliad SA builds market share.

Shareholder Pressure

At 16.6 billion euros, Vivendi’s market capitalization compares with almost 40 billion euros in total value of its various businesses, not counting 12 billion euros of net debt, according to estimates by Morgan Stanley analysts. The investment bank values SFR alone at 12.9 billion euros, and Brazilian phone unit GVT at 5.2 billion euros.

Levy and Fourtou faced calls to change managers and invite new members to the board at the company’s shareholder meeting last week. Levy also came under fire from shareholders asking for plans to tackle the company’s low valuation.

“Our conglomerate discount has become gigantic, close to 40 percent,” Fourtou said at the meeting in Paris. “We will not stay idle, and there are no taboos about how we will tackle this. We will look over our strategy, our perimeter and our image among investors.”

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Thursday, 26 April 2012 09:55 AM
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