Havas may become its own company as Vivendi explores splitting into three

French billionaire Vincent Bolloré is weighing a breakup of his sprawling media and entertainment empire, Vivendi SE, in a strategic reversal aimed at reviving the value of its businesses. The shares surged. Under the plan, the French conglomerate, which has a market value of about €10 billion ($10.9 billion), would be split into three: pay-TV arm Canal+; advertising and communications branch Havas; and a business that includes its majority stake in publishing group Lagardère, the Paris-based company said in a statement on Wednesday. Vivendi SE is also considering options for its €1.3 billion ($1.4 billion) stake in former phone monopoly Telecom Italia SpA, people familiar with the matter said. Check out the latest Ad Age events and award programs Since listing its most valuable business, Universal Music Group, the French company said it has “endured a significantly high conglomerate discount,” cutting its valuation and limiting growth opportunities for its subsidiaries. The three separate entities could fetch a market valuation about 40% higher than where they’re currently valued, UBS analyst Adam Berlin said in a note on Thursday. The strategy marks “a U-turn from the current strategy of seeking closer integration among its disparate collection of media assets,” Bloomberg Intelligence analyst Matthew Bloxham said. Vivendi had tried to create synergies between its activities, turning intellectual property such as Paddington Bear into films, books and marketing campaigns in an effort to build a European empire to rival Netflix Inc. and Walt Disney Co. More news: How media giants are marketing streaming bundles Vivendi shares rose 7.7% to €9.65 at 12:44 p.m. in Paris trading. The shares earlier gained as much as 12%, the biggest intraday rise since Sept. 2021. Pay-TV group Canal+ is the company’s largest unit, accounting for more than half of sales and earnings. Last year it generated about €5.9 billion of revenue and €515 million in earnings before interest, taxes depreciation and amortization. Havas came second, accounting for more than a quarter of the company’s revenue. That could translate into valuations of about €6.1 billion for Canal+ and about €3 billion for Havas once split off from their parent company, Oddo analyst Jerome Bodin said. The investment structure holding the Lagardère stake could fetch a value of about €4.9 billion, he said. Vivendi will tap its “usual” banks and advisers to study a potential breakup and any plan would need to bring value to all stakeholders and account for tax consequences, the company said. The company didn’t say when it would make a decision. More from Ad Age: Havas CEO on AI and more Investors have been watching to see whether Bolloré—Vivendi’s controlling shareholder, who’s been likened to fellow media mogul Rupert Murdoch—tries to raise his stake in the company to win greater control over the media business and take it in new directions. If the split goes through, Bolloré has a war chest to pursue further operations as a controlling shareholder of various media groups after the family’s investment vehicle, Bollore SE divested its transport and logistics business. Known as a ruthless corporate raider, Bolloré worked to internationalize his media group over the past decade. Since taking control of Canal+ about eight years ago, Bolloré has made the once-struggling unit a Netflix-like platform by acquiring rivals in Europe, Africa and Asia. Still, a split of Bolloré’s empire could call into question the family’s succession planning as the 71-year-old officially steps back from some of his businesses. Cyrille Bolloré, 38, currently leads Bollore SE, while his older son, Yannick Bolloré, 43, is the chairman of Vivendi. Telecom Italia Vivendi has spoken with advisers as it evaluates potential options including a sale of its 24% holding in Telecom Italia, according to the people, who asked not to be identified because the matter is confidential. Representatives for Vivendi and Telecom Italia declined to comment. For the Italian company, an exit by Vivendi could smooth the way for the €22 billion sale of its fixed-line phone network to KKR & Co. Vivendi, Telecom Italia’s biggest shareholder, wants to block the deal, and is finalizing legal action to halt it as soon as this week. Vivendi is set to contend that the deal doesn’t comply with Italian corporate law. The value of Vivendi’s stake has been shrinking for years. Vivendi agreed to take on an initial Telecom Italia holding as part of a 2014 deal to sell its Brazilian broadband business GVT to Telefonica SA, then an investor in Telecom Italia. The Italian company’s shares have lost more than two thirds of their value since then. Vivendi paid about €3.9 billion in 2015 and 2016 for additional shares in Telecom Italia. Telecom Italia shares rose 5.6% to 0.263 cents at 4:46 p.m. in Milan, while Vivendi climbed 11% to €9.93, bolstered by news of the potential broader breakup. Last month, Bolloré’s son, Vivendi Chairman Yannick Bolloré, said in an interview with French daily Les Echos that the Telecom Italia stake was reclassified as a “financial holding” because the company is now focusing on media and entertainment. Vivendi Chief Executive Officer Arnaud De Puyfontaine resigned from Telecom Italia’s board in January. The phone carrier’s board is set to gather Thursday to preliminarily review a plan that would keep CEO Pietro Labriola in his role and present a slate of candidates for the board, the people said, who asked not to be named when discussing private information. Vivendi’s request to block the network sale was announced last month after Telecom Italia’s board approved the move without calling for a full shareholder meeting. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Havas may become its own company as Vivendi explores splitting into three

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