Vivendi Gets Closer to Split With Bollore as Deputy Chairman

Vivendi SA moved closer to a long-discussed plan to split its telecommunications business from media assets, marking another sweeping reorganization of the former French utility.

Bowing to investor pressure to overhaul its structure, Vivendi will begin a formal study to separate its French phone unit SFR and assemble the rest of its businesses into a new international media group based in France, it said yesterday. Billionaire shareholder Vincent Bollore will become deputy chairman, as Vivendi ends its search for a new chief executive.

The division, similar to Rupert Murdoch’s split of his publishing business from the rest of the News Corp. media empire, gives further impetus to the shakeup of Europe’s telecommunications industry. In the past week, Vodafone Group Plc agreed to sell its U.S. wireless business for $130 billion and Microsoft Corp. took over Europe’s last major handset-making business, owned by Nokia Oyj.

“The board agreed there were no synergies between telecoms and content, and that was dragging down Vivendi because of a holding structure discount,” Bollore said in an interview with Les Echos newspaper. “A split is an attractive plan, and it has my full support.”

Europe Cinema

Music, pay-TV, European cinema and Internet in Brazil will make up the new Vivendi. A final decision on the reorganization will be made at the beginning of next year before being taken to shareholders, the Paris-based company said.

Chairman Jean-Rene Fourtou is making good on a promise he made to investors more than a year ago to restructure the company to boost its market valuation. The 74-year-old Frenchman in the past quarter agreed to cut Vivendi’s holding in video-games maker Activision Blizzard Inc. and entered exclusive talks to dispose of a controlling stake in Maroc Telecom SA to Emirates Telecommunications Corp.

Asset sales have left him with control of SFR as well as music company Universal Music Group, pay-television unit Canal Plus and Brazilian broadband provider GVT.

Vivendi rose 3.2 percent to 17.23 euros at 9:05 a.m. in Paris. Even as the stock has rebounded more than 40 percent from a nine-year low of 12 euros reached in April last year, it is still trading at 1.26 times book value, similar to 2008 levels, data compiled by Bloomberg show.

Retirement Plan

For years, investors have said Vivendi’s company structure makes the stock trade at a discount to the value of its assets. 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, Vivendi said its board was considering a split.

There will be no further asset sales at Vivendi, Bollore told Les Echos. Bollore, who owns 5 percent of Vivendi and a 7.1 percent stake of advertising company Havas SA, said there’s no plan to combine the two entities, he said in the interview.

Fourtou is expected to retire in about a year once Vivendi’s transformation is well in place, said a person familiar with the matter, asking not to be named discussing internal deliberations.

Vivendi plans to keep CEO Jean-Francois Dubos, who stepped in after predecessor Jean-Bernard Levy was removed in June last year, Bollore was cited as saying in Les Echos. The company, which hired a headhunter to identify potential successors, had been sizing up candidates.

Net Debt

Bollore, 61, has been building up a stake in Vivendi. His holding is valued at about 1.1 billion euros ($1.5 billion). With holdings in businesses ranging from African ports to an electric-car sharing service in Paris, Bollore joined Vivendi’s supervisory committee in December after selling his television assets to the company.

Taking into account asset disposals including Maroc Telecom and Activision, Vivendi’s net debt will drop to 6.5 billion euros from 17.4 billion euros as of June 30, the company said last month.

For Vivendi, the decision to shift to media marked another chapter in the improbable transformation of the former water utility into a global media company. Former CEO Jean-Marie Messier embarked on a $77 billion acquisition spree in music, film and telecommunications before being pushed aside in a 2002 boardroom coup.

Levy, his successor, went on to reinforce Vivendi’s presence in telecommunications. Fourtou retook oversight of the company after Levy was removed.

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