By Gianluca Lo Nostro, Florence Loeve and Paul Sandle
GDANSK/PARIS/LONDON (Reuters) – Vivendi (OTC:VIVHY) management and bosses of some of its newly spun out companies – Canal+, Havas and Louis Hachette Group – need to lay out more clearly their strategies to convince investors the break-up was worth it, analysts and investors said.
The spin-offs in December, backed by the Bollore family, split Vivendi into four multi-billion-euro companies in a bid to unlock value as the French media conglomerate’s overall market capitalisation was estimated to be less than the sum of its parts.
But some of the standalone companies had a weak start, triggered in part by a lack of information about strategy, some disappointing financial guidance and uncertainty around pay-TV group Canal+’s acquisition of broadcaster MultiChoice (JO:MCGJ), the analysts and investors said.
Shares in Vivendi’s newly listed businesses fell in their first month of trading to levels below their combined value before the split, undermining the Bollore family’s hopes to boost value.
Only Louis Hachette shares are currently above their listing price, and Vivendi is trading above the last closing price before the split as adjusted by stock exchange operator Euronext (EPA:ENX).
The combined market capitalisation of the four companies was 7.7 billion euros ($7.92 billion), based on LSEG data as of the close on Jan. 17. Before the break-up, Vivendi was worth about 8.3 billion euros, based on LSEG data.
Canal+ listed in London, advertising agency Havas debuted in Amsterdam and publishing business Louis Hachette Group listed in Paris.
Canal+, the biggest company, has been the laggard, with its shares down 31% since they listed on Dec. 16.
Analyst Francois Godard at Enders Analysis said it had been impossible to split the group at the optimum point in the cycle for all of the companies, and with its South Africa deal yet to close, Canal+ had suffered.
“Now they have to take their time to explain their business,” he said, referring to Canal+.
The market would have a clearer view in the second half of 2025 after a few quarters of results, he said.
Havas and Louis Hachette report their full-year results on March 5 and February 13 respectively. Canal+ has yet to set a date for results.
Vivendi, Canal+, Havas, and Louis Hachette as well as representatives for the Bollore Group declined to comment.
UBS analysts said last month that the split had failed to create value on day one, adding that the path to shareholder returns is unclear at Canal+.
They ascribed the sell-off in Canal+ shares to financial guidance falling short of investor expectations and a lack of dividend.
There is also some uncertainty about the broadcaster’s acquisition of South African broadcaster MultiChoice, analysts added, including clarity on the route to profitability, not expected until after the deal closes.
“We don’t really know what’s going to happen, so people are cautious,” said Jean-Michel Salvador, an analyst at French equity research firm AlphaValue.
Analysts said some shareholders have offloaded their stakes in London-listed Canal+ as the company is not eligible to join certain indexes because it is domiciled in France or because some investors are restricted from holding shares traded in sterling.
MINORITY OPPOSITION
Some minority shareholders were opposed to the break-up plan, including activist funds CIAM and Phitrust, arguing that the split would deprive investors like them of the protection of French stock market laws.
Bollore’s holding company owns over 30% of each of the three spun-off entities, which previously under French rules would require a mandatory offer for all the shares. But this does not apply to the new entities.
Phitrust’s co-founder, Denis Branche, said that while it would take a couple of months to get a better picture, he did not believe the now smaller Vivendi holding company would be able to fix its longstanding conglomerate discount.
“The market (now) considers Vivendi a financial holding, so there will always be this discount”, he told Reuters.
Vivendi and Yannick Bollore, chairman of Vivendi’s supervisory board and son of Vincent Bollore, rejected the activist shareholders’ claim that the break-up deprives minority shareholders of protections. Vivendi has said the split was endorsed by shareholder advisory firms.
Last month, Barclays (LON:BARC) said Havas was trading at a discount to peers due to a governance structure that prevents board changes and hostile takeovers and that this was a factor deterring some investors.
Stéphane Le Gall, a fund manager at Arkea Asset Management, another minority shareholder in Vivendi, told Reuters he was waiting for a revaluation of the combined four stocks, which he believes will happen when the companies explained their respective strategies.
“Let’s be patient, the Vivendi galaxy is a story of 2025, not December 2024,” he said. The fund that he manages has kept all its shares in the different entities for now.
($1 = 0.9724 euros)