Vivendi’s new ‘galaxy’ of companies needs more time to spell out strategy, analysts, investors say

By Gianluca Lo Nostro, Florence Loeve and Paul Sandle

GDANSK/PARIS/LONDON (Reuters) – The management of Vivendi and the heads of some of its new companies – Canal+, Havas and Louis Hachette Group – must set out more clearly their strategies to convince investors that it was worth regret the breakup, according to analysts. and the investors said.

December’s spin-offs, backed by the Bollore family, split Vivendi into four multibillion-dollar companies in a bid to unlock value as the French media conglomerate’s global market capitalization was estimated to be less than the sum of their parts

But some of the stand-alone companies got off to a weak start, driven in part by a lack of information on strategy, some disappointing financial guidance and uncertainty over pay-TV group Canal+’s acquisition of the MultiChoice network , 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 for a boost in value.

Currently, only Louis Hachette shares are above their listing price and Vivendi is trading above its last closing price before the split, as adjusted by stock market operator Euronext.

The combined market capitalization of the four companies was 7.7 billion euros ($7.92 billion), according to LSEG data at the close of Jan. 17. Before the breakup, Vivendi was worth around 8.3 billion euros, according to data from LSEG.

Canal+ is listed in London, advertising agency Havas debuted in Amsterdam and publishing business Louis Hachette Group is listed in Paris.

Canal+, the largest company, has been a laggard, with its shares down 31% since they went public on 16 December.

Analyst Francois Godard of Enders Analysis said it had been impossible to split the group at the optimal point in the cycle for all companies and, with its deal with South Africa yet to close, Canal+ had suffered.

“Now they have to take their time to explain their business,” he said in reference 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 annual results on March 5 and February 13 respectively. Canal+ has not yet set a date for the results.

Vivendi, Canal+, Havas and Louis Hachette, as well as representatives of the Bollore Group, declined to comment.

Analysts at UBS said last month that the division had failed to create value on day one, adding that the path to shareholder returns is unclear at Canal+.

They attributed the sale of Canal+ shares to financial guidance below investors’ expectations and the lack of dividends.

There is also some uncertainty surrounding the broadcaster’s acquisition of South African broadcaster MultiChoice, the analysts added, including clarity on the path to profitability, which was not expected until after the close of the agreement

“We don’t really know what will 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 ineligible to join certain indices because it is domiciled in France or because some investors are restricted from holding shares traded in sterling.

MINORITY OPPOSITION

Some minority shareholders opposed the breakup plan, including activist funds CIAM and Phitrust, arguing that the split would deprive investors like them of the protection of French stock market laws.

Bolloré’s holding company owns more than 30% of each of the three spin-off entities, which previously according to French regulations would require a mandatory offer for all shares. But this does not apply to new entities.

Phitrust 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 could fix its long-standing conglomerate discount.

“The market (now) considers Vivendi a financial stake, so there will always be that discount,” he told Reuters.

Vivendi and Yannick Bollore, chairman of Vivendi’s supervisory board and son of Vincent Bollore, rejected claims by activist shareholders that the breakup deprives minority shareholders of protections. Vivendi has said the split was endorsed by shareholder advisory firms.

Last month, Barclays said Havas was trading at a discount to peers because of a governance structure that prevents board changes and hostile takeovers and that this was a factor deterring some investors.

Stéphane Le Gall, fund manager at Arkea Asset Management, another minority shareholder in Vivendi, told Reuters he was expecting a revaluation of the four combined stocks, which he believes will come when the companies explain their respective strategies.

“Let’s be patient, the Vivendi Galaxy is a story for 2025, not December 2024,” he said. The fund he manages has for the time being kept all his holdings in the various entities.

($1 = 0.9724 euros)

(Reporting by Gianluca Lo Nostro in Gdansk, Florence Loeve in Paris and Paul Sandle and Amy-Jo Crowley in London. Writing by Anousha Sakoui. Editing by Josephine Mason and Jane Merriman)

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