Vivendi's Spin-Offs: A Neutral Start or a Value Trap?

In the ever-evolving landscape of corporate strategy, Vivendi's recent spin-offs of Canal+, Havas, and Louis Hachette Group have left investors and analysts alike scratching their heads. The French media giant, once a beacon of conglomerate prowess, has embarked on a bold restructuring plan aimed at unlocking value. However, the initial market reaction suggests that the path to shareholder returns is far from clear.



The spin-offs, backed by the Bollore family, were intended to separate Vivendi into four multi-billion-euro companies, each with its own strategic focus. The rationale was simple: unlock value by allowing each entity to pursue its growth objectives independently. However, the market has not fully embraced this vision. As of January 17, 2025, the combined market capitalization of the four companies was 7.7 billion euros, a drop from Vivendi's pre-split value of about 8.3 billion euros. This discrepancy highlights the market's skepticism towards the new entities.

Canal+, the largest of the spin-offs, has been the laggard, with its shares down 31% since listing on December 16, 2024. Analysts have cited a lack of clear strategy, disappointing financial guidance, and uncertainty around Canal+'s acquisition of South African broadcaster MultiChoice as key factors contributing to this weak performance. The market's cautious approach is further underscored by the fact that only Louis Hachette shares are currently above their listing price, while Vivendi itself is trading above the last closing price before the split as adjusted by Euronext.

The recent spin-off of Vivendi's businesses into Canal+, Havas, and Louis Hachette Group has had a mixed impact on the company's valuation and market perception. Initially, the spin-off was intended to unlock value by separating the conglomerate into four multi-billion-euro companies, as the overall market capitalization of Vivendi was estimated to be less than the sum of its parts. However, the market has not fully embraced the new entities, with some of the standalone companies experiencing a weak start.



For instance, Canal+, the largest company, has seen its shares drop by 31% since they listed on December 16, 2024. This decline is attributed to a lack of clear strategy, disappointing financial guidance, and uncertainty around Canal+'s acquisition of broadcaster MultiChoice. Analyst Francois Godard at Enders Analysis noted, "It had been impossible to split the group at the optimum point in the cycle for all of the companies, and with its South Africa deal yet to close, Canal+ had suffered." This uncertainty has led to a cautious approach from investors, with some offloading their stakes in Canal+ due to its listing eligibility for certain indexes and the potential impact on shareholder composition.

Havas, which debuted in Amsterdam, and Louis Hachette Group, listed in Paris, have also faced challenges. Only Louis Hachette shares are currently above their listing price, while Vivendi is trading above the last closing price before the split as adjusted by Euronext. The combined market capitalization of the four companies was 7.7 billion euros ($7.92 billion) as of January 17, 2025, compared to Vivendi's pre-split value of about 8.3 billion euros. This indicates that the spin-off has not yet created the expected value for investors.

The potential long-term implications for investors are multifaceted. On one hand, the spin-off could lead to more focused management and strategic clarity for each of the new entities, potentially driving long-term growth and value creation. For example, Canal+ could benefit from a clearer integration plan and expected synergies from the MultiChoice acquisition, while Havas could outline a clear organic net revenue growth target and dividend policy. Louis Hachette Group could also detail a strategy for maximizing value creation through steady dividend distributions.

However, there are also risks and uncertainties. Some minority shareholders, including activist funds CIAM and Phitrust, have expressed concerns about the loss of protections post-split, arguing that the split deprives investors of the protection of French stock market laws. Phitrust's co-founder, Denis Branche, stated, "The market (now) considers Vivendi a financial holding, so there will always be this discount." This perception could limit the potential for value creation and make it challenging for the new entities to attract and retain investors.

In conclusion, while the spin-off of Vivendi's businesses into Canal+, Havas, and Louis Hachette Group has the potential to unlock value and drive long-term growth, the initial market reaction has been mixed. Investors will need to closely monitor the performance of the new entities and their strategies to determine the long-term implications of the spin-off. The recent spin-off of Vivendi's businesses into Canal+, Havas, and Louis Hachette Group has had a mixed impact on the company's valuation and market perception. Initially, the spin-off was intended to unlock value by separating the conglomerate into four multi-billion-euro companies, as the overall market capitalization of Vivendi was estimated to be less than the sum of its parts. However, the market has not fully embraced the new entities, with some of the standalone companies experiencing a weak start.