Vivendi surprises market
March 3, 2015
By Chris Forrester
March 2nd saw French investment and manufacturing conglomerate Groupe Bolloré acquire a further 40 million shares in media giant Vivendi, and in the process increasing its stake in Vivendi from 5 per cent to 8.15 per cent (and paying €852 million for the stock) at an average price of €21.
However, the move generated different responses from the market.
For example, investment bank Exane BNP-Paribas, in a flash note to clients, said this move could be seen as a strong signal of confidence from Bolloré in Vivendi’s future. “The more Bolloré owns of Vivendi, the better in our view.”
“On the negative side, it could create the impression that Bolloré ‘trades’ against minority shareholder with information asymmetry. This could upset some minority shareholders.”
“Bottom line we are entering the second stage of the new Vivendi story with disposals almost over and better control of the company by Bolloré who, according to our industry sources, is spending the majority of its time on Vivendi. Bolloré will likely create value in the long run at Vivendi but meanwhile offers little visibility to short term investors. We believe Vivendi is well suited for long term investors who have a cautious view on the market given the defensive feature of the group (yield, share buyback, cash, defensive assets).”
On the other hand investment bank Jefferies, focusing on last Friday’s results was more concerned that this year’s guidance from Vivendi indicated that cash returns to share-holders could be about 60 percent below previous guidance. “Vivendi argues that ‘Rome wasn’t built in a day’ but shareholders have little sense of what is being built, and no incentive to wait and see.” Jefferies shifted its recommendations from ‘Hold’ to ‘Underweight’, adding that Canal+ is still dealing with legacy revenue streams [which are in ] structural decline.