The lion's share of Vivendi's holding was scooped up by institutional investors, while Havas acquired shares representing about 1% of issued capital, increasing its control to about 3.4% and diminishing the chances of a hostile takeover in the near future.
Vivendi Universal registered a capital gain of $95 million through the divestment in Havas, parent of the Euro RSCG Worldwide network, and announced that all proceeds from the sale would be used to fund its planned $2.2 billion buyout of Boston-based textbook publisher Houghton-Mifflin Co.
Vivendi has been slowly reducing its once-majority share in Havas over the past several years, with Chairman-CEO Jean-Marie Messier repeatedly stating that advertising was not a core business for the entertainment, media and utilities giant. Speculation over how and when Vivendi would sell its remaining 9.9% stake has been hanging over Havas this year.
Havas shares -- traded in Paris and on the New York-based Nasdaq Stock Market -- dipped by 3% to 4% Wednesday as rumors of Vivendi's pullout began surfacing, but the stock price had rebounded by similar or greater amounts today as details of the transaction became available.
Vivendi sold its shares in Havas for about $12.65, or just below the market price, offering the new investors little opportunity to recoup their investment in the short-term.
Analysts believe that this linkage between current market prices and Vivendi's divestment price sends a strong signal of confidence as to the future growth potential of Havas, trading at just under $13.55 in Paris as of press time.
At Fortis Securities, a leading French brokerage with a keen eye in the media sector, analysts have reiterated their firm "buy" recommendation on Havas, estimating the share could jump by more than 50%, to a minimum of $20.32 in the medium-term.
Analysts at a host of other French brokerages -- including UBS Warburg, Exane, KBC Securities and ETC -- also maintained buy recommendations in the wake of the Vivendi divestment, previously cited as one of the main sticking points to sustainable growth in the share price over the long-term. -- Lawrence J. Speer
Copyright June 2001, Crain Communications Inc.