Vivendi Shares Jumps on Plan for UMG Spinoff by Year-End
February 15 2021 - 5:09AM
Dow Jones News
By Olivia Bugault
Vivendi SE shares rose sharply Monday after the European media
giant said Saturday that it plans to distribute 60% of its
subsidiary Universal Music Group's capital to shareholders and to
spin off its profitable music label by year's end.
At 0919 GMT, Vivendi shares are up 17.9% at 30.79 euros
($37.40), while shares of French company Bollore SE, which owns
roughly 27% of Vivendi's capital, are up 13.7% at EUR4.12.
"Vivendi's leading institutional shareholders have been pressing
for a number of years for a split or the distribution of Universal
Music Group to reduce Vivendi's conglomerate discount," Vivendi
said.
The distribution of UMG's shares to investors would be in the
form of a special dividend, Vivendi said.
Vivendi had set a minimum target for the enterprise value of
UMG--which would seek listing on Euronext in Amsterdam--at EUR30
billion ($36.36 billion), it said. It had announced plans for a
listing of the world's largest music business around a year
ago.
Late last year, Chinese internet company Tencent Holdings Ltd.
doubled its stake in the music giant behind Ariana Grande and
Billie Eilish in a deal that valued UMG at EUR30 billion. The
Tencent-led consortium now owns 20% of UMG. After the planned
spinoff, Vivendi would keep only 20% of UMG's share capital.
The plan will strongly benefit shareholders, Citi said. "It is
the first time Vivendi has made a major attempt to disintermediate
itself when it comes to the capital reduction in music, giving its
own shareholders direct participation in UMG upside," the bank
said.
Citi said that after the planned spinoff Vivendi's revenue--on a
pro forma basis--will fall to EUR9 billion from roughly EUR17
billion and its earnings before interest, taxes, and amortization
will decline to around EUR950 million from around EUR2 billion.
In addition, Vivendi proposed an ordinary dividend of EUR0.60 a
share for fiscal year 2020.
Write to Olivia Bugault at olivia.bugault@wsj.com
(END) Dow Jones Newswires
February 15, 2021 04:54 ET (09:54 GMT)
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