Vivendi Spin-Off: Analysts Urge for Clearer Strategies to Boost Investor Confidence

Vivendi's management and executives from its recently spun-off subsidiaries, Canal+, Havas, and Louis Hachette Group, are facing calls to elaborate their strategies to persuade investors of the value in the breakup.

The December spin-offs, orchestrated by the Bollore family, divided Vivendi into four multibillion-euro entities in an attempt to unlock value beyond its current market capitalization. However, several standalone companies experienced a lackluster start due to limited strategic guidance, underwhelming financial projections, and uncertainties surrounding Canal+'s acquisition of MultiChoice.

Shares in Vivendi's newly listed entities declined during their initial trading month, falling below their combined value prior to the split. Only Louis Hachette shares currently trade above their listing price, while Vivendi remains above its adjusted pre-split closing price.

As of January 17th, the combined market capitalization of the four companies stood at €7.7 billion ($7.92 billion). In contrast, Vivendi's pre-split valuation was around €8.3 billion.

Canal+, listed in London, has performed poorly, with its shares dropping 31% since their December 16th debut. Enders Analysis analyst Francois Godard attributed this decline to the challenges of splitting the group at an optimal time and the pending closure of the MultiChoice deal.

"Canal+ needs to take their time to clearly explain their business. The market will gain a clearer understanding in the second half of 2025 after several quarters of results," he said.

Havas and Louis Hachette are set to release their full-year results on March 5th and February 13th, respectively, while Canal+ has yet to announce a date. Vivendi, Canal+, Havas, and Louis Hachette, as well as Bollore Group representatives, declined to comment.

UBS analysts observed that the split had not generated value initially, expressing concerns about Canal+'s path to shareholder returns. They attributed the sell-off in Canal+ shares to disappointing financial guidance and the absence of dividends.

Industry experts also highlighted uncertainties regarding Canal+'s MultiChoice acquisition, such as the path to profitability and its timeline.

"Investors are cautious due to the lack of clarity," said Jean-Michel Salvador, an analyst at AlphaValue.

Analysts noted that some shareholders have divested their stakes in London-listed Canal+ due to its ineligibility for certain indexes and investor restrictions on sterling-traded shares.

Minority shareholders, including activist funds CIAM and Phitrust, opposed the breakup plan, arguing that it would diminish investor protection under French stock market laws. Bollore's holding company holds over 30% of each spun-off entity, which would normally trigger a mandatory offer for all shares under French regulations. However, this obligation does not extend to the new entities.

Phitrust co-founder Denis Branche doubts that Vivendi, now with a reduced size, can overcome its longstanding conglomerate discount.

"The market now sees Vivendi as a financial holding, which will always result in a discount," he stated.

Vivendi and Yannick Bollore, chairman of Vivendi's supervisory board and son of Vincent Bollore, dismissed the activists' concerns about decreased minority shareholder protections. Vivendi claims that shareholder advisory firms supported the split.

Last month, Barclays expressed that Havas traded at a discount to peers due to its governance structure, which restricts board changes and hostile takeovers.

Stéphane Le Gall, a fund manager at Arkea Asset Management, believes a revaluation of the combined four stocks will occur as the companies clarify their strategies.

"Patience is key. The Vivendi galaxy is a 2025 story, not one for December 2024," he said. His fund has maintained its shares in the different entities for now.