UPDATE: Vivendi To Buy Vodafone's SFR Stake For EUR7.95 Billion
April 03 2011 - 7:17PM
Dow Jones News
Vivendi SA (VIVHY, VIVEF, VIV.FR) agreed to buy Vodafone Group
PLC's (VOD, VOD.LN) 44% minority stake in French telecommunications
operator SFR for EUR7.95 billion Sunday, a long-awaited move that
will give the French media giant access to more cash to increase
its dividend and sharpen its focus on existing operations.
For Vodafone, the sale continues Chief Executive Vittorio
Colao's strategy of selling minority interests, as the U.K. mobile
company is keen to strengthen its position in Europe, India and
Africa as a way of increasing shareholder value.
The SFR deal has been highly anticipated by analysts, especially
after Vivendi recently increased its financial leeway with the sale
of its stake in NBC Universal and the receipt of a settlement from
the end of a long-running dispute in Poland.
Vivendi CEO Jean-Bernard Levy said the group is "very pleased"
to have secured 100% ownership of SFR, which will help management
"to focus further on profitable growth and innovation."
"I am very confident that this will greatly benefit both the
group's industrial development and our millions of subscribers and
consumers globally," Levy said in a statement, adding that the
transaction will "create a significant increase in Vivendi's
adjusted net income, enabling us to raise the dividend to our
shareholders."
It's also good news for Vodafone investors, with the group
announcing Sunday that EUR4.5 billion, or GBP4 billion, of net
proceeds from the SFR stake sale will be returned to shareholders
via a share buy-back with the remainder of the proceeds used to
reduce the group's net debt. The share buy-back will be carried out
after the completion of the existing program, which is expected to
be completed in June 2011.
Vodafone CEO Colao, who only a few days ago moved to cement the
group's position in India, said the board "remains committed to
realising maximum value from our non-controlled assets."
"The sale of our stake in SFR, at an attractive multiple,
represents a significant further step in the execution of this
strategy," he said.
By returning GBP4 billion to Vodafone shareholders, the company
is increasing its current buy-back program to GBP6.8 billion in
total, equivalent to more than 7% of Vodafone's current market
capitalization, Colao noted.
In addition, SFR and Vodafone have agreed to a so-called
'Partner Market' agreement, which will maintain their commercial
co-operation for a further three years. This will allow Vodafone
"to continue to deliver compelling cross-border services to both
consumer and enterprise customers across the major markets of
western Europe," Colao said.
Under the terms of the deal, Vivendi will pay Vodafone EUR7.75
billion for its 44% stake in SFR, which equates to a 6.2 multiple
of SFR's reported 2010 earnings before interest, tax, depreciation
and amortization of EUR3.97 billion. On completion of the deal,
which is subject to the approval of local anti-trust regulators,
Vodafone will receive a final dividend from SFR of EUR200
million.
Vodafone last Thursday agreed to pay $5 billion to buy out its
joint-venture partner, Essar Group, in India, in a bid to
strengthen its position in a difficult market.
Vodafone last September restructured its divisions, placing all
the minority stakes it holds in other companies into a separately
managed unit. The company has also sold its stake in China Mobile
for GBP4.3 billion before tax and transaction costs and divested
its holding in Softbank Corp. (9984.TO) of Japan for GBP1.3
billion.
Vodafone is also looking to sell its 24.4% stake in Polish
mobile operator Polkomtel SA.
The SFR deal is expected to be completed by the end of June
2011.
-By Lilly Vitorovich, Dow Jones Newswires; +44 (0) 207 842 9290;
lilly.vitorovich@dowjones.com
--Inti Landauro and Ruth Bender in Paris contributed to this
article