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If Vivendi today were the Rolling Stones then Mick Jagger would have already left the band. Universal Music was the frontman of the French media conglomerate that is controlled by French tycoon Vincent Bolloré.
The record label — home to Their Satanic Majesties among others — was successfully spun off in 2021 for €47bn. The rest of the group took it hard. Fans have abandoned Vivendi’s shares and the conglomerate discount is now close to 40 per cent. The Bolloré family was spurred to act. A fuller break-up of the business should follow.
The proposal would mean new solo stock market careers for broadcaster Canal+ and advertising agency Havas. The remaining Bolloré interests, such as stakes in publisher Lagardère and Telecom Italia, would continue within a listed holding company.
A simple sum of the parts suggests the break-up of the group, worth €11.2bn before news broke, would be an easy financial win. Longer-term strategic goals should be simpler for solo acts to achieve.
Vivendi remains influential in the francophone world. That linkage has helped Canal+ to resist US streaming services like Netflix in recent years. The broadcaster has managed to integrate streaming services into its own offering. Profits have grown solidly since 2016.
If we value Canal+ at six times ebitda like UK broadcaster ITV, it would have an enterprise value of €5bn. Supposing Havas is worth a multiple of seven times like peers Publicis and Interpublic, it would be worth almost €3bn.
The final gain for shareholders depends on the discount that would apply to the investment holding company. If it stays at 40 per cent then a further 5 per cent bump for the sum of the parts might follow a break-up. A 30 per cent discount might be fairer, says Barclays, and closer to comparable peers. It would give credit for the success of Universal. Additional returns would then move above one-tenth for the split.
Operationally, the break-up would pose some puzzles. Dividing up Vivendi’s €1.9bn cash pile would be one issue.
The break-up would deliver value. Investors could meanwhile expect the Bolloré family, these days fronted by Vivendi chair Yannick Bolloré, to continue calling the tune.
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