Vivendi announced on September 20 that its board had approved an increase to its buy-back program up to 4.2% of its capital (on top of the 2.07% already owned).
Since then, Vivendi has been aggressively buying its own shares. The company has bought back 34.4m shares since UMG’s spin-off or 3.1% of its capital. They currently have 57.3m treasury shares or 5.2% of its capital.
When Vivendi will be done with the current buy-back program, they will have 67.3m treasury shares or 6.1% of its capital (an additional 9.9m shares or 0.9% of its capital still to be bought back)
In addition, the AGM approved a maximum buy-back of 10% of Vivendi’s capital. Hence, once Vivendi is done with the current buy-back program, they will most certainly initiate a new one for an additional 43.6m shares or 3.9% of its capital.
Vivendi has paid an average price of €10.87 and has bought back on average 10% of the volume. However, when excluding the 3 days following UMG’s spin-off, Vivendi has bought back on average 15% of the volume.
We believe the buy-back program has been executed as a VWAP order. Indeed, the average price paid matches exactly the average VWAP of €10.87 over the period.
We got confirmation from Vivendi that UMG’s spin-off is legally and fiscally considered as a distribution in kind and hence not a spin-off. As a result, the buy-back maximum price does not need to be adjusted and is still €29.
However, we note that the maximum price paid by Vivendi is €11.0. The company did not buy any shares on October 08th while the price was over €11.0 the whole day.
If Vivendi keeps on buying 15% of the volume (assuming an average daily traded volume of 17.2m shares or the average in the past 10 days), Vivendi will have exhausted its buy-back capacity by November 09th.
Any further buy-back over 10% of the capital would require the cancellation of some treasury shares but trigger Bollore passively crossing the 30% threshold (as he currently owns 29.7% of Vivendi’s voting rights) and hence launching a mandatory offer as he committed.