1/ Conclusion
The last update on the split project was on Jul 25th. We should find out in coming weeks the date of the EGM.
Since July 25th, VIV has bought back 17.9m shares or 13% of the ADV.
VIV also announced on Sep 09th an increase to its Share buy-back program (see section 5 for details).
VIV is clearly accelerating its SBB ahead of the Split project.
VIV is currently trading at a 38% discount to our NAV (see section 3 for details).
The value per VIV share of the Split project is €14.4 if the spin-offs distributions are 50% taxed at a 30% flat tax rate (guidance from CFO on call), a 41% upside from VIV’s current price (see section 4 for details).
Such position could be hedged by shorting 26% of UMG (its % of VIV's NAV). We would not hedge the other listed VIV assets and a decision has to be made on whether to hedge the unlisted assets with for example the SXMP.
We believe the time is right to set-up a long VIV FP's position.
Even if the hedging of such position is far from straight forward, the risk/reward is attractive enough to consider setting up the position.
2/ Last update on Split project
The last update on the split project was communicated to the market on July 25th during Q2 results:
- Timing:
- “If this project were to proceed following the information and consultation procedures, a decision could be taken at the end of October 2024, with the aim of submitting it to an Extraordinary Shareholders’ Meeting which could be held in December 2024 (two-thirds majority)”
- “If approved by the Extraordinary Shareholders’ Meeting, the allocation of the shares in the various companies concerned to Vivendi’s shareholders and their listing on the stock market, are expected to take place in the days following such meeting”
- Canal+:
- Would remain a company incorporated and taxed in France
- Be listed on the London Stock Exchange
- Could be subject to a secondary listing on the Johannesburg stock market
- Havas:
- Would become a Dutch public limited liability company (NV)
- Would remain French tax resident for French corporate income tax purposes
- Be listed on Euronext Amsterdam stock exchange
- A Dutch legal foundation would guarantee the preservation of the group’s independence and identity, and multiple voting rights, initially double after two years of holding, then quadruple two years later, would be offered to long term committed shareholders, taking into account the length of time the Vivendi shares were held for the double voting rights
- Louis Hachette Group:
Be comprised of VIV’s 63.5% stake in MMB as well as 100% of Prisma Media
Would be listed on Euronext Growth in Paris
Would have no debt of its own except for Lagardère’s Net debt of approximately €2 billion which has recently been refinanced
Continued listing of its subsidiary Lagardère SA on the regulated market of Euronext Paris
- Vivendi RemainCo:
- Remain listed on the regulated market of Euronext Paris
- Retain the minority interest it could acquire in Lagardère SA through the exercise of the transfer rights issued as part of the 2022 public tender offer, which remain exercisable until June 15, 2025
Furthermore, VIV has provided details on the debt allocation between the various entity. The investment company would basically keep all debt excepted the debt raised for the Multichoice tender offer. The investment company would end up with a Net debt of €1.5-2.0bn.
The implementation of this project is not expected to lead to the launching of a public tender offer for Vivendi or for any of its separated entities.
3/ VIV Updated SOP
VIV is currently trading at a 38% discount to our NAV.
4/ Implied value of Split project
Assuming:
The resulting investment company trades at a 20% discount to its NAV as investors will clearly price in the probability of BOL taking full control (All debts, liabilities and Holdco costs at the investment company level)
Louis Hachette at a 20% discount
We still have uncertainties on how the holding costs would be allocated as it does not make sense for all of them to be allocated to VIV InvestCo (as done for now).
The value per VIV share would be:
€16.2 if the spin-offs distributions are tax free, a 59% upside from VIV’s current price
€14.4 if the spin-offs distributions are 50% taxed at a 30% flat tax rate (guidance from CFO on call), a 41% upside from VIV’s current price
5/ VIV Share Buy-back program
Since July 25th, VIV has bought back 17.9m shares or 13% of the ADV.
VIV announced on Sep 09th that the size of its SBB program would be increased from 25,407,259 to 35,146,514 shares.
Most importantly, all the additional shares to be bought back should be cancelled.
As of Sep 09th, VIV has 38.1m shares in treasury of which 32.1m shares to be cancelled or 3.12% of VIV’s capital.
There is still 10m shares to be bought back in the increased program or an additional 0.97%.
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4/ Implied value of Split projectAssuming:
€14.4 if the spin-offs distributions are 50% taxed at a 30% flat tax rate (guidance from CFO on call), a 41% upside from VIV’s current price
5/ VIV Share Buy-back programSince July 25th, VIV has bought back 17.9m shares or 13% of the ADV.VIV announced on Sep 09th that the size of its SBB program would be increased from 25,407,259 to 35,146,514 shares.Most importantly, all the additional shares to be bought back should be cancelled.As of Sep 09th, VIV has 38.1m shares in treasury of which 32.1m shares to be cancelled or 3.12% of VIV’s capital.There is still 10m shares to be bought back in the increased program or an additional 0.97%.
