Update on Vivendi post Q3 results (CIX updated : .H-VIV%)
Since the UMG spin-off, Vivendi:
- Announced on Sep 23rd that they had Increased their stake in Multichoice to 15.4% (On October 1st, Public Investment Corporation SOC a state owned entity announced that they had acquired a 15.2% stake)
- Increased their stake in Lagardere to 27.6% (as per agreement with Amber)
- Repurchased 39.0 million shares, i.e., 3.52 % of the share capital, for a total amount of €464 million.
- As of October 20, 2021, Vivendi directly held 59.7 million of its own shares, i.e., 5.38% of the share capital
- Vivendi can still buy up to 7.6m shares under current SBB program agreed by the board
- Vivendi’s board can still increase this 7.6m number up to a maximum of 51.2m (max 10% of capital agreed at last AGM)
- If Vivendi were to keep on buying stock at the same rythm (11% of average traded volume since Sep 24), they would be done by Nov 25
- However, Vivendi has paid a max price of €11 (average price paid since UMG spin-off of €10.87) while the max price that can be paid is €29
Updated SOP
We assume the 59.7m treasury shares have been cancelled hence reducing the number of shares outstanding to 1,049m
Opinion
Vivendi has performed well since the UMG spin-off
Q3 results are quite positive on all fronts (no change in our SOP to the valuation of Canal +, Havas or Editis)
Canal + revenues were announced 3.2% of consensus which is probably the reason for the positive market reaction today
Vivendi currently trades at a 29.9% discount to NAV
We would still keep the position as we believe the risk reward is attractive:
- Business fundamentals are ok
- You are protected on the downside with the buy- back program as Vivendi is buying up to €11
We believe Vivendi will exhaust its Buy-back capacity and could then launch an OPRA at a small premium for the remaining 40% they are allowed to buy (50% - 10% SBB)
If Vivendi were to launch an OPRA at a 10/15% premium (€12.7/13.3) to current price for the remaining shares they can buy and then cancel the shares acquired (OPRA + SBB), this would allow Bollore to increase its stake to approx. 60%
We realise people are uncomfortable being “minority shareholders in a Bollore controlled company” but:
- The price offered in the OPRA needs to be at a premium in order to convince some shareholders to tender. Would you not tender if you are offered a price of €12.7/13.3? We believe some would
- If the OPRA price offered is too low, Bollore will not achieve its goal to increase its stake and potentially reach 50%
- Bollore would increase its stake and take full control at a average 20/24% discount to NAV which makes sense financially (he is using the SBB program to average down the price paid)
- In addition, an unlevered Vivendi is inefficient and the OPRA might sort this out
- An OPRA for the remaining 44.6% at €13 would cost Vivendi €6.4bn but the 10% UMG stake represents 70% of that amount so it could be financed
Available if you have any questions
David