The December 2023 break-up of Vivendi into four independent companies—Canal+, Havas, Louis Hachette Group, and the remaining Vivendi holding company—was intended to unlock shareholder value. However, analysts and investors are demanding clearer strategies from the newly formed entities to justify the restructuring.
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Initial market performance of the spun-off companies has been underwhelming, with share prices falling below their pre-split combined value. This decline raises questions about the effectiveness of the Bollore family-backed strategy, which aimed to capitalize on the perceived undervaluation of Vivendi as a conglomerate. Only Louis Hachette shares currently trade above their listing price, while Vivendi itself remains above its pre-split value. As of January 17th, 2024, the combined market capitalization of the four entities stood at €7.7 billion, compared to Vivendi’s pre-split valuation of approximately €8.3 billion.
Several factors contribute to the market’s hesitant response. Analysts cite a lack of clear strategic direction from the individual companies, coupled with disappointing financial guidance and uncertainty surrounding Canal+’s acquisition of MultiChoice, a South African broadcaster.
Canal+ Faces Significant Challenges
Canal+, the largest of the spun-off companies, has experienced a particularly sharp decline, with its shares down 31% since its London listing on December 16th, 2023. Analysts point to the complexities of the MultiChoice acquisition, including questions about profitability and integration, as contributing to investor unease. The deal’s pending closure further obscures the path forward.
Havas and Louis Hachette Await Earnings Reports
Havas and Louis Hachette are scheduled to release their full-year results in the coming weeks. These reports will provide a crucial opportunity for the companies to articulate their strategic vision and address investor concerns. Canal+ has yet to announce a date for its earnings release.
Investor Concerns Persist
Beyond strategic uncertainties, other factors weigh on investor sentiment. Analysts at UBS have highlighted the lack of a clear path to shareholder returns at Canal+, particularly the absence of a dividend. The uncertainty surrounding the MultiChoice acquisition adds to the negative outlook. Furthermore, Canal+’s London listing, while intended to broaden its investor base, has faced challenges due to index eligibility requirements and restrictions on some investors holding sterling-denominated shares.
Governance and Conglomerate Discount Remain Key Issues
Minority shareholders, including activist funds CIAM and Phitrust, voiced opposition to the break-up plan, citing concerns about reduced legal protections under French stock market regulations. The Bollore family’s significant ownership stake in each of the spun-off entities circumvents mandatory offer requirements that would have applied under previous French rules. Concerns also linger about the governance structure of Havas, which limits board changes and hostile takeovers, potentially deterring some investors. Additionally, the question remains whether the remaining Vivendi holding company can overcome the longstanding conglomerate discount that plagued the pre-split entity.
Looking Ahead: A Story for 2025?
Some investors remain optimistic, believing that a revaluation of the combined entities will occur once the individual companies articulate their strategies and demonstrate their potential. The coming months will be critical for the newly independent companies to clarify their direction, address investor concerns, and ultimately prove the merits of the Vivendi break-up.
