Vivendi Evaluating Potential Separation Of Four Business Divisions

Deal Overview

On April 29, 2024, Vivendi SE (OTC ADR: VIVHY, $10.51; Market Capitalization: $10.8 billion) announced 1Q24 earnings and said it is on track to explore ways to split-off its business into four companies and list them on exchanges. Vivendi, a leading global media conglomerate, is looking to unlock shareholder value by pursuing the separation of its Canal+ Group, Havas, Vivendi’s interest in Lagardère with Prisma Media, and an Investment company.

On December 13, 2023, it was announced that the company is studying the feasibility of splitting into multiple listed entities structured around Canal+, Havas, publishing and distribution company (including Lagardère and Prisma Media) and an investment company. According to management, these firms are experiencing significant growth in an international context marked by numerous investment opportunities. The separation would ensure that value is delivered to all entities associated with the Group. It would facilitate the establishment of independent entities, each equipped with the necessary personnel and financial flexibility, allowing them to pursue their strategic growth objectives independently.

The reorganization is contingent upon approval from the Supervisory Board. Subsequently, it will undergo consultation with employees and representative bodies of the affected entities. Following this consultation, approvals will be sought from creditors and regulatory authorities. Additionally, approval from Vivendi’s shareholders at the annual general meeting scheduled for April 2025 will be required. The transaction is expected to take 12 to 18 months to complete. The reorganization necessitates Vivendi to restructure debt and secure financing, as ensuring sufficient liquidity is a key criterion for the separation.

Vivendi is assisted by its usual bankers and financial advisors in conducting the analysis of potential split.

Deal Rationale

Since Universal Music Group’s distribution and listing in 2021, Vivendi has been subject to a significant conglomerate discount, resulting in a notable decrease in valuation and limiting its capacity to execute external growth initiatives for its subsidiaries. Management believes that this steep discount is unwarranted given the robust growth opportunities experienced by its group companies, such as Canal+ Group, Havas, and Lagardère. These companies are experiencing favorable investment environments.

In a proposal presented to the Supervisory Board on December 13, 2023, Vivendi’s Management Board recommended exploring the possibility of splitting the company into various entities, each to be listed on the stock market, in order to unlock the full development potential of its activities.

The group will be split into Canal+ Group, Havas, a company overseeing the publishing and distribution business (Lagardère + Prisma Media), and an Investment company. Each of these entities will become independent and listed on stock exchanges. Following the reorganization, Vivendi would continue to be a listed company, supporting its subsidiaries’ growth and managing investments.

Other Transactions

On June 9, 2023, Vivendi announced that it had received approval from the European Commission to proceed with its proposed merger with Lagardère group, provided that Vivendi fulfilled two commitments: selling 100% of Editis’ share capital and selling Gala magazine. On November 21, 2023, Vivendi confirmed the completion of the transaction with Lagardère group, following the sale of Editis’ entire issued share capital to International Media Invest on November 14, 2023, and the sale of Gala magazine to Groupe Figaro on November 21, 2023.

Company Description

Vivendi SE (Parent)

Vivendi SE, founded in 1853 and headquartered in Paris, France, operates as an entertainment, media, and communication company across Europe, the U.S., Asia, and Africa. It engages in Music, Television, Video Games, Telecommunications, and Publishing industry, with divisions including Canal+ Group, Lagardère, Havas, Prisma Media, Gameloft, Vivendi Village, New Initiatives, and Generosity and Solidarity. As of December 31, 2023, Vivendi had 72,958 employees.

Canal+ Group (Split-Off)

Canal+ Group is a prominent European media establishment mostly involved in television industry. The division’s extensive portfolio of television channels catering to a wide range of interests and demographics. It’s has expanded into online streaming with services like myCANAL, so subscribers can access the content. Canal+ Group has about 26.4 million subscribers in almost 50 countries.

Havas (Split-Off)

Havas is a leading international advertising and communications establishment that delivers diverse marketing and communication solutions to clients across different sectors worldwide. Offerings traditional advertising, digital marketing, media planning and purchasing, public relations, brand advisory, experiential marketing, and more.

Publishing and Distribution (Split-Off)

Publishing and distribution operations will manage Lagardère and Prisma Media business. Lagardère focuses primarily on publishing books, encompassing a wide variety of genres including literature, education, and illustrated books. Prisma Media, on the other hand, is a major magazine publisher in France, offering an extensive range of print and digital titles covering news, lifestyle, entertainment, and fashion.

Investment Company (Split-Off)

The investment company will hold interests in a range of culture, media, and entertainment companies, encompassing both listed and unlisted entities, as part of its strategy to diversify its investment portfolio.