Vivendi SA (VIV) shareholder Vincent Bollore will replace Chairman Jean-Rene Fourtou, who led the former French utility for more than a decade, when it completes a separation of telecommunications business from media assets.
The spinoff, approved by Vivendi’s supervisory board yesterday, may entail distributing shares of its SFR mobile-phone unit to shareholders, the Paris-based company said. Arnaud de Puyfontaine, Hearst Magazines International’s managing director for Western Europe, will join Vivendi in early 2014 to lead its media and content businesses. Vivendi shares rose.
Vivendi is entering a new phase of reorganization after selling assets including stakes in Activision Blizzard Inc. (ATVI) and Maroc Telecom SA. SFR accounted for 47 percent of its revenue in the first nine months. Comparable to Rupert Murdoch’s split of his publishing business from the rest of the News Corp. media empire, the move will leave Vivendi with Universal Music Group, pay-TV unit Canal Plus and Brazilian broadband provider GVT.
“Investors will have to make two decisions: one is if they want to continue to hold both stocks,” said Claudio Aspesi, an analyst at Sanford C. Bernstein. “With the de-merger, SFR becomes a potentially attractive acquisition target, so I think that probably the share price will have upside. And on the other side, on the media side obviously investors will be most focused what happens for divestitures.”
Shares of Vivendi rose as much as 3.5 percent and advanced 2.5 percent to 19.05 euros at 9:19 a.m. in Paris. They had gained 9.7 percent this year through yesterday, valuing the company at 24.9 billion euros ($33.8 billion).
Vivendi plans to present details of the separation of SFR to works councils and regulatory authorities. The proposal will be put to shareholders at an annual meeting in June 2014.
Until the completion of the demerger, the management board, chaired by Jean-Francois Dubos, will include Jean-Yves Charlier, Chairman and CEO of SFR, and de Puyfontaine.
Bollore, 61, joined Vivendi’s supervisory committee in December after selling his television assets to the company. Shareholders have been calling for him to join the board as early as April last year. He owns about 5 percent of Vivendi.
Hailing from northwestern France, Bollore transformed a nearly two-century-old family-owned paper mill into an international force with interests ranging from advertising company Havas SA (HAV) to African ports and rail systems. His Blue Solutions SA makes electric batteries, and held an initial public offering last month. He also has two free newspapers, a stake in movie producer Gaumont SA (GAM) and a cinema in Paris.
De Puyfontaine, 49, was most recently the CEO of Hearst Magazines’ U.K. division. His career included a stint at French newspaper Le Figaro. He was one of the founders of EMAP France, a publisher that was acquired in 2006 by Italy’s Arnoldo Mondadori Editore SpA. He joined Hearst in April 2009.
Vivendi first announced its intention to study a reorganization of the company structure in 2012, when its stock was trading near a nine-year low. Bloomberg News reported in April 2012 that Vivendi was considering an overhaul that may lead to a breakup of the company. After announcing the sale of the Activision stake in July this year, Vivendi said its board was considering a split.
At a conference in Barcelona last week, Chief Financial Officer Philippe Capron said the split would allow Vivendi to aim for a valuation comparable to large U.S. media companies, or about 10 times earnings before interest, taxes, depreciation and amortization, compared with a multiple of three to six times analysts put on the Universal Music Group, Canal Plus and GVT units.
The separation would “offer SFR greater strategic autonomy to seize opportunities in a transforming market, reflecting the growing number of services and high-speed broadband access in an environment with a huge increase in usage,” Vivendi said in its statement.
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