For investment banks, Vivendi SA (VIV) is a gift that keeps on giving.
The metamorphosis of Europe’s biggest telecommunications and media company, which participated in $61 billion in asset purchases and sales in the last decade, has generated a steady stream of fees for merger and acquisition advisers.
This week the Paris-based company announced $13.8 billion in deals, including yesterday’s agreement to sell most of its stake in video-game group Activision Blizzard Inc. (ATVI) for $8.2 billion. For bankers, who stand to gain as much as $145 million in fees in the week’s sales, according to research firm Freeman & Co., the deals have been a boon. First-half global transactions slid 4 percent from the year-earlier period to about $988 billion, according to data compiled by Bloomberg.
“The intermediaries, and notably the banks, are happiest with these operations, and in some cases, the biggest shareholders,” said Anis Bouayad, chairman of consulting firm Strategie Alliance in Paris.
Banks from Goldman Sachs Group Inc. (GS) and Lazard Ltd. (LAZ) to JPMorgan Chase & Co. are benefitting from the efforts of Vivendi Chairman Jean-Rene Fourtou to unwind an empire that included the world’s largest video-games company, the biggest music distributor and France’s second-largest mobile-phone company. Vivendi has paid out about $348 million in investment-banking fees since 2008, according to Freeman.
Once a sleepy French water utility that went by the name of Generale des Eaux, Vivendi was transformed in the 1990s by former Chief Executive Officer Jean-Marie Messier, a self-proclaimed “Master of the Universe,” into a globe-spanning entertainment group.
Messier was ousted in 2002, with his acquisition binge leaving behind a company that posted the biggest loss in French corporate history. Former CEO Jean-Bernard Levy, from whom Fourtou took the reins last year, added assets from Brazil to France.
Bankers rode the wave of Vivendi’s expansion, and are now riding it back down as the company shrinks.
With Vivendi, “you build it up, and you take it down,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. “It’s always been this churning of assets.”
The volume of Vivendi’s dealmaking in the last decade was roughly equal to that of local competitor Orange SA, whose 2012 revenues were about 50 percent greater and which employs almost three times as many people.
Earlier this week, Vivendi announced exclusive talks to unload its 53 percent stake in Maroc Telecom SA for 4.2 billion euros ($5.6 billion) to Emirates Telecommunications Co., reversing an attempt to build an African mobile business.
For the Maroc Telecom sale, Vivendi tapped Lazard and Credit Agricole SA for advice, while the buyer, better known as Etisalat, relied on BNP Paribas SA.
On the Activision deal, Goldman Sachs and Barclays advised Vivendi, JPMorgan worked with Activision while the game publisher’s special committee of directors was advised by Centerview Partners LLC. Activision CEO Bobby Kotick and his partners, who are among the buyers, were advised by Allen & Co.
The deal will bring Centerview, a New York-based boutique, within striking distance of UBS AG in rankings for M&A advice, with total volume of about $65 billion, Bloomberg data show.
Vivendi’s revenue has almost halved from its peak of 58.2 billion euros in 2002 to about 29 billion euros last year. A company representative declined to comment on the fees it pays banks on transactions.
Fourtou is pushing Vivendi to focus on media assets such as Universal Music Group, the world’s largest record label, and French pay-TV provider Canal Plus instead of slower-growing telecommunications businesses.
To be sure, Vivendi has benefitted from the assets in its stable. Strong growth at GVT and Activision, which publishes titles like “Call of Duty” and “World of Warcraft,” helped it beat earnings estimates, and Maroc Telecom gave it a slice of a growing market for mobile communications in Africa.
Brazilian broadband provider GVT, for which Fourtou unsuccessfully sought a buyer, has also expanded in tandem with the growth of the South American country’s middle class. It was a centerpiece of Levy’s telecommunications-focused strategy.
This week’s announcements add to a long list of media and telecommunications transactions. The largest was the 2011 purchase of Vodafone Group Plc (VOD)’s stake in SFR, the second-largest French mobile operator, for $11.3 billion.
In 2009, Vivendi sold its minority stake in NBC Universal, the owner of U.S. television networks and Hollywood studios, to General Electric Co. for $3.8 billion.
Vivendi executives are already flagging further deals.
“One possibility among others is that we engineer a split of the company with SFR being taken out of the perimeter,” Chief Financial Officer Philippe Capron said on a call with analysts yesterday. “The GVT process could be started again. That would leave us to start re-growing the group again around Universal Music and Canal.”
While little is certain about the future composition of Vivendi, which oversees its empire from a building on Paris’s Avenue Friedland, Europe’s M&A bankers may have more occasions to visit its headquarters in the shadow of the Arc de Triomphe.
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