Vivendi Strategic Course of Action - Minority Activision Share Buy Out
If you are keeping up to speed on Vivendi's activity, of the six businesses of Vivendi (Activision/Blizzard, Universal, Canal, GVT (Brazil Telecom), SFR (French Telecom) Maroc (Morocco Telecom)), Vivendi is preparing to divest its telecom assets of GVT, SFR and Maroc.
Since Vivendi tried to shop its interest in Activision this summer to no avail, there is a new CEO and a new majority Vivendi shareholder/boardmember (Vincent Bollore). The common theme is that it appears that want to divest all of the Vivendi telecom assets.
Purchase prices will be: 1) GVT between 7-8B euros; 2) SFR between up to 18B B euros; and 3) Maroc Telecom about 4.5B euros.
Vivendi has hired Deutsche Bank, Rothschild for the GVT divestiture; BNP Paribas and Goldman Sachs for the SFR divestiture; and Credit Agricole and Lazard for Maroc Telecom. Once this occurs, Vivendi will be forced to consolidate the 410 M Activision shares it does not own.
Look for a tender offer from Vivendi for 14-15/share before February.
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Vivendi Prepares E30bn Telco Exit
Published on 11-14-2012
France’s Vivendi is looking to exit the telecoms space altogether, as it runs three separate processes considering the sale of its Brazilian, French and Moroccan telco assets, which it is understood to value at a combined total of over E30bn.
The company has made the decision to focus on content and media where it is having much more success – and is consequently preparing an exit from the telecoms sector, which it sees as too capital extensive. The wider strategic review will see the group consider offers for GVT in Brazil, Maroc Telecom and France’s SFR, although the company does not consider itself under pressure to sell any asset.
Vivendi is believed to have mandated Rothschild and Deutsche Bank to oversee the sale of GVT; BNP Paribas and Goldman Sachs for SFR; and Credit Agricole and Lazard for Maroc Telecom.
No deadlines have been given, but GVT is thought to be the most advanced, with offers expected soon. Four contenders have been linked with the sale: DirecTV is thought to be heading up the chase, with Carlos Slim’s America Moviles, Telecom Italia and Brazil's Grupo Oi also thought to be interested. Vivendi is hoping to get E7-8bn (US$8-9bn) for GVT, which a banker told TMT Finance was a reasonable valuation.
Vivendi lost its appetite for the telecoms sector after Free Mobile made a late entry into the French market and kicked off a damaging price war. Vivendi subsequently missed its E3bn profits target by E0.5bn, and a rapid strategic review followed which led to a swift change in management and a refocus on media, content and music.
The large amount of capital required in the telco sector is thought to be a turn-off for Vivendi, while the improving regulatory and consumer environment for media and content – such as the reduction in illegal downloading – is seen as improving opportunities in these sectors significantly. For Vivendi, which owns assets such as Universal Music and Canal Plus, this is a key shift in the market.
In its new results released November 13 Vivendi increased its net income outlook to E2.7bn from E2.5bn for 2012. This was attributed in part to the successful launch of its video game title Activision Blizzard, while its EBITA dropped 7% in Q3 2012, due mainly to SFR’s poor performance. Year-end net debt outlook is just under E14bn.
A number of options are seen as viable for SFR in France where everyone is talking to everyone but no quick solution is likely. A flotation could also be a possibility.
As previously reported in TMT Finance, private equity group Numericable is being advised by Morgan Stanley and JPMorgan on a potential merger with SFR. Bouyges, Free and Vodafone are also seen as contenders for the asset, which Vivendi is thought to value at up to E18bn.
Meanwhile, Qtel is thought to be the strongest placed of the potential bidders for Maroc Telecom. Etisalat, MTN, STC and France Telecom are all seen as potential buyers of this asset (see last week’s issue for more details on the bidders). Maroc Telecom also owns subsidiaries in Mali, Gabon, Burkina Faso and Mauritania, but is still unclear what will happen to the Sub-Saharan assets as a result of the sell-off. Vivendi is thought to value Maroc at E6bn, although one banker outside the deal said E4.5bn was more likely.
Well, this is interesting, but assuming your source information is correct, how does this support your assertion that Vivendi will "be forced to consolidate" is ATVI shares and will pay "14 to 15" dollars for them??
Maybe "forced to consolidate" is a little strong. My only point was that when Vivendi divests all three of its telecom businesses, it will only have 100% of Universal; 100% of Canal and 62% of Activision.
Vivendi will want to consolidate the cash flow of Activision to pay out dividends and probably fund some acquisitions in media and content, which can only happen if it owns 100% of the Activision shares, hence the desire to put a tender forward for the remaining 421M Activision shares that it does not own.
Regarding the price it will offer for the tender, it seems that if you back out the the $3/share, 11-12X EBITDA seems like a market rate, but I could be wrong. However, it will not be $11/share.
Additionally, if you recall after the original merger in 2008, remember there was a tender made at that time by Vivendi for about $26/share, pre split, which occurred after the tender failed.
Regarding the present processes with GVT, SFR and Maroc, they are real search on Google. The Financial Times in Europe is covering...