(News Bulletin 247) – The group present in the media and communications has indicated that it is studying a split project into three companies structured around Canal+, Havas and an investment company bringing together financial holdings, including that in Lagardère. The idea for the group is to make up its conglomerate discount.

Vivendi’s depressed valuation desperately needed a catalyst. But the market probably wasn’t expecting this one.

The group, which is preparing to return to the CAC 40 six months after its ouster, announced Wednesday evening that it was studying a proposed split into three listed companies.

It should be remembered that Vivendi suffers from a defect that is hardly appreciated by the market: it is a conglomerate, bringing together several relatively distinct activities such as media and cinema (Canal+, Prisma Media), video games (Gameloft), communication (Havas) and more recently Hachette and travel retail (sales in airports and train stations) via the takeover of Lagardère, finalized in mid-November.

However, investors largely prefer pure players of an activity to conglomerates bringing together several businesses. They thus penalize the valuation of these conglomerates by applying a stock market discount to them (i.e. a discount compared to the sum of the valuation of each activity of the conglomerate taken each separately). In October this discount stood at around 45%, according to Barclays.

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Canal+, Havas and a third company

This is the whole point of the Vivendi split project: to reduce this stock market discount by obtaining more generous valuation multiples for each of the three companies that will be listed.

Vivendi also says this very clearly in its press release: “since the listing of Universal Music Group in 2021, Vivendi has suffered a very high conglomerate discount, significantly reducing its valuation and thus limiting its capacity to carry out capital transactions. external growth (company buyouts, editor’s note for its subsidiaries).

In detail, the split of Vivendi would revolve around three groups. The first would be structured around Canal+ which “has experienced significant growth in recent years to reach a portfolio of more than 25 million in nearly 50 countries”. The encrypted channel intends to continue its acquisitions “to exploit other opportunities” for consolidation on an international scale.

The Havas communications group would constitute the second listed company. Third and final company: an investment company which would hold listed and unlisted financial interests including the approximately 60% that Vivendi owns in the capital of Lagardère.

“This investment company would pursue an active policy of development of all of its holdings and would be focused on the creation of value and the return of capital to its shareholders through an effective rotation of its portfolio and a targeted reinvestment policy” , explains Vivendi.

What intentions for Bolloré Group?

The company’s split project “must demonstrate its added value for all stakeholders and include an analysis of the tax consequences of the various planned operations”, also indicates the group which will provide a progress update on this project. on time”.

Behind this relatively logical split obviously remains a question about the intentions of the Bolloré Group, the reference shareholder, with more than 29% of Vivendi’s capital.

Could Vincent Bolloré’s company, via this split, gain a stake in one of the three groups more easily? Or try to bring one of these companies together? Speculation about a hypothetical takeover of Publicis, which would then have been merged with Havas, briefly affected Publicis shares last June. And in March 2021, BFM Business reported that discussions had previously taken place between Vivendi and Publicis resulting in a refusal by the group led by Arthur Sadoun.

On the Paris Stock Exchange, Vivendi shares soared and gained 11.5% at the start of the session this Thursday at almost 10 euros per share.

“Definitely, Vincent Bolloré will never cease to surprise, the project presented being the opposite of the rumors of simplification of the group’s galaxy of structures. It is, however, clear that the operation would crystallize the value of Canal+ and Havas , a bit like UMG (Universal Music Group, Editor’s note)”, comments Invest Securities. “The upcoming project will need to be specified and it is however likely that the third entity will be much less valued, but the total amount should have a significant impact on the valuation,” adds the design office.

“We estimate that the combined capitalization of the three entities could be approximately 40% higher than the current capitalization,” judges in a UBS note.