Vivendi’s Clear Message On Music

Investors including Activision chief exec Bobby Kotick and co-chairman chairman Brian Kelly are paying a reported $8.2 billion to cut a deal that will see Vivendi’s ownership reduced from 61.1 percent to 12 percent.

News of the deal came days after the Paris-based media giant said it’s also raking in $5.9 billion by selling its 53 percent stake in Maroc Telecom to Etisalat, the Emirates Telecommunications Corporation. Rather than sell Universal at what appears to be a premium, Vivendi’s clearly set on slashing some of its other interests to go toward its debt load. 

Just as the Maroc deal was announced, the UK’s Financial Times and Daily Telegraph were reporting that Vivendi had knocked back an $8.5 billion offer for its Universal Music division, equal to about nine times its earnings before interest, taxes, depreciation and amortization. It appeared to be a good offer given that Universal’s purchase of EMI’s record and publishing business cost $4.1 billion, around 7.6 times EBITDA.

Since joining the board last October, having upped his Vivendi stake from 4.4 percent to 5 percent, French billionaire Vincent Bolloré has cautioned against having so many eggs in the music business basket.

He’s reportedly urged some of his fellow board members to at least take a second look at other strategies. However, the strategy seems solidified since the departure of former chief exec Jean-Bernard Lévy in June, which came when Universal was waiting on regulatory approval for the EMI takeover.

He also appeared not to agree with it. Vivendi’s statement on the Activision deal stresses the value the company created with its games business, which it puts at $8 billion. “This transaction represents an important step forward in the strategic review conducted by the Vivendi supervisory board over the last year,” said management board chairman Jean-François Dubos.

“It provides the group with greater financial flexibility and creates value for our shareholders. Vivendi is progressing at its own pace in the announced restructuring, to reach new growth milestones.” Activision investors liked the news, with the company’s stock price jumping about 13 percent on the news.