Vivendi’s new ‘Galaxy’ of companies needs more time to explain strategy, say analysts and investors

By Gianluca Lo Nostro, Florence Loeve and Paul Sandle

GDANSK/PARIS/LONDON (Reuters) – Vivendi Management and the owners of some of its fledgling companies – Canal+, Havas and Louis Hachette Group – need to lay out their strategies more clearly to convince investors. , analysts noted the break-up was significant. And investors said.

In December the spin-off, backed by the Bollor family, split Vivendi into four multi-billion-euro companies to unlock value as the French media group’s overall market capitalization was estimated to be less than the sum of its parts.

But some standalone companies had a weak start, fueled by a lack of strategy, some disappointing financial guidance and uncertainty over the acquisition of pay-TV group Canal+’s broadcaster MultiChoice, analysts and investors said.

Shares in Vivendi’s newly listed businesses fell to levels below their combined value in their first month of trading before the split, undermining the Bollore family’s hopes of a valuation boost.

Only Louis Hatchett’s shares are currently above their listing price, and Vivendi is trading above its last closing price before the split arranged by stock exchange operator Euronext.

The combined market capitalization of the four companies was 7.7 billion euros ($7.92 billion), based on LSEG data as of the close on Jan. 17. Before the break-up, Vivendi was worth around 8.3 billion euros based on LSEG data.

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

Canal+, the largest company, lagged behind with its shares down 31% since listing on December 16.

Francois Goddard, analyst at Anders Analysis, said it was impossible for all companies to split the group at the optimal point in the cycle, and with its South Africa deal yet to close, Canal+ suffered.

“Now they have to take time to explain their business,” he said, referring to Canal+.

He said the market outlook will be clear in the second half of 2025 after the results of a few quarters.

Havas and Louis Hatchett report their full-year results on March 5 and February 13, respectively. Canal+ is yet to set a date for the results.

Representatives for Vivendi, Canal+, Havas, and Louis Hatchett, as well as Bollor Group, declined to comment.

UBS analysts said last month that the split had failed to create value on day one, adding that the path to shareholder returns on Canal+ was unclear.

He attributed the sale of Canal+ shares to investor expectations for financial guidance and the lack of dividends.

There is also some uncertainty surrounding the broadcaster’s acquisition of South African broadcaster MultiChoice, analysts added, including clarity on the path to profitability, not expected until the deal closes.

“We don’t really know what’s going to happen, so people are cautious,” said Jean-Michel Salvador, an analyst at French equity research firm AlphaValue.

Analysts said some shareholders have shed their stakes in London-listed Canal+ because the company is not eligible to join some indices because it is based in France or because some investors are prevented from holding shares that trade in sterling. .

Minority opposition

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

Bollor’s holding company owns more than 30% of each of the three spin-off entities, which previously required a mandatory offer for all shares under French rules. But this is not applicable to new institutions.

Dennis Branch, co-founder of Fitrust, said that while it would take a few months to get a better picture, he did not believe the now-smaller Vivendi holding company would be able to recover from its long-standing group discount.

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

Vivendi and Yannick Bollor, chairman of Vivendi’s supervisory board and son of Vincent Bollor, rejected claims by activist shareholders that the breakup would deprive minority shareholders of protections. Vivendi has said the divestiture was supported 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 rival transactions and was a factor deterring some investors.

Stephane Le Gall, a fund manager at Arcia Asset Management, another minority shareholder in Vivendi, told Reuters he was waiting for a revaluation of the combined four stocks, which he believes will happen when the companies adjust their strategies. explain the

“Let’s be patient, Vivendi Galaxy is the story of 2025, not December 2024,” he said. The fund he manages keeps all his shares in different entities.

($1 = 0.9724 Euro)

(Reporting by Gianluca Lo Nostro in Gdansk, Florence Lowe in Paris, and Paul Sandel and Amy-Jo Crowley in London. Writing by Anusha Skoi. Editing by Josephine Mason and Jane Merriman)