Thursday's deal involves French water services and communications company Generale des Eaux handing its stake in pay-TV station Canal Plus to Havas, which then would increase Havas' controlling stake in the channel nearly 44%. Transport and communications company Alcatel, meanwhile, agreed to reduce it's holding in Havas from just over 20% to 10% - a move that will allow Generale des Eaux to eventually increase it's share in Havas to 30%, and become the primary investor in the company.
The strengthening of Generale des Eaux's influence in Havas is being seen as an effort to speed up the creation of a French multi-media champion to take on foreign heavyweights like Bertlesmann, Leo Kirsch, News Corp. and Time-Warner. While profitable and long one of France's blue-chip companies, Havas' diversified activities have increasingly been viewed as over-extended, and too broad in an era where focusing on core businesses is the trend. Insiders therefore feel that Generale des Eaux's weight as a shareholder and determination to be a major player in the multi-media industry will ultimately bring about the sell-off of Havas' unrelated activities, including its travel businesses and advertising interests.
But such consolidation is not expected to take place for at least two to three years - far longer than an imminent announcement that rumors had been predicting. According to these rumors, Havas-owned Euro-RSCG would be put on the block immediately in an attempt to slim down the holding company and bring in new cash for strategic expansion.
A reliable French ad industry insider commented: "These are long-term moves with long-term views. That said, however, it's clear that advertising is not an activity that Generale des Eaux is going to feel is vital to its strategic interests. Even though Euro RSCG is profitable, it's not year-to-year profits that are going to be taken under consideration in planning. Generale des Eaux is taking the long-view in strategic terms, and my guess is that means within a few years, Havas will be selling off its advertising and travel units."
Copyright February 1997, Crain Communications Inc.