Lagardere Wants Market, Not Vivendi, to Value Canal Plus Stake

Lagardere SCA Chief Executive Officer Arnaud Lagardere
Lagardere SCA Chief Executive Officer Arnaud Lagardere. Photographer: Eric Piermont/AFP/Getty Images

Lagardere SCA will look to the market to value its 20 percent stake in Canal Plus France, rather than leave it up to Vivendi SA, which owns the rest.

France’s largest publisher will follow the planned initial public offering of its stake in the country’s biggest pay-television operator “to the end,” Chief Executive Officer Arnaud Lagardere said yesterday. If Vivendi makes a last-minute offer, Lagardere might sell only a part of the stake in an IPO, he said.

“Arnaud doesn’t want to be bullied by Vivendi, and wants to show he has options,” said Conor O’Shea, an analyst with Kepler Capital Markets in Paris. “The strength of that hand will only become apparent in the next few weeks.”

Lagardere and Vivendi, which has said it wants to own 100 percent of Canal Plus France, last year failed to reach an accord on the stake’s value. An IPO may raise more than 1.35 billion euros ($1.87 billion) for Lagardere, two people familiar with the matter said last month. The Paris-based company carries the stake at 1.5 billion euros on its balance sheet, and may seek to ride the rebound in global stock markets. France’s benchmark CAC 40 Index has risen 4.2 percent this year.

For the publisher of Elle magazine and Paris Match, “what’s certain is that there will be an IPO,” CEO Arnaud Lagardere said at a press conference outside Paris last night.

Vivendi, the owner of the world’s largest music and video-games publishers, wants to take full control of Canal Plus, CEO Jean-Bernard Levy reiterated this month, and refused to rule out a last-minute deal.

Lagardere shares traded 0.9 percent lower at 32.50 euros as of 10:56 a.m. in Paris. Vivendi fell 0.4 percent to 19.99 euros.

Asset Sales

Lagardere is selling assets to focus on domestic publishing and a push into sports marketing favored by its CEO. The company in January announced an agreement to sell the international editions of magazines including Car and Driver for 651 million euros to New York-based Hearst Corp.

Arnaud Lagardere has promoted a push into sports rights and athlete representation through a new unit, Lagardere Unlimited. In May, the company announced the acquisition of Best, a U.S. sports agency with clients including basketball player Rafer Alston. It also took a minority stake in the Saddlebrook sports academy in Florida.

Lagardere faces legal trouble after French investigators re-opened a probe into alleged insider trading connected to the 2006 sale of part of its stake in European Aeronautic, Defence & Space Co. The company, which was cleared in 2009 in a similar investigation by the French market regulator, denies any wrongdoing.

Earnings

Separately, the publisher yesterday reported 2010 net income rose 19 percent to 163 million euros, short of the 237 million-euro average estimate of 10 analysts surveyed by Bloomberg.

The company, whose brands include Paris’s Journal de Dimanche newspaper and the Hachette publishing group, said it expects earnings before interest and taxes from its media activities to rise about 10 percent this year at constant exchange rates.

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