By Ruth Bender and Sam Schechner
PARIS-- Vivendi SA Friday accepted a bid from cable billionaire
Patrick Drahi to buy its remaining stake in French telecom company
SFR, completing another asset sale at the former conglomerate that
has slimmed itself down into a smaller media company.
Vivendi's board agreed to sell the 20% it holds in France's
second-largest telecom operator by subscribers, Numericable-SFR, to
Mr. Drahi for EUR3.9 billion (about $4.36 billion), hardly three
months after Vivendi sold control of SFR to the billionaire cable
investor in a $23 billion deal.
The stake sale to Altice SA--the Luxembourg-based telecom
holding controlled by Mr. Drahi--ends all existing agreements
between the two groups. As part of the deal with Mr. Drahi, Vivendi
last year agreed to keep a 20% holding in Numericable-SFR, the
group Mr. Drahi formed by merging cable group Numericable with
SFR.
"Vivendi has undergone a significant change," Arnaud de
Puyfontaine, the company's chief executive, said on an earnings
call.
The move comes as Vivendi reported it had more than tripled its
fourth- quarter net profit to EUR1.99 billion, driven by capital
gains from the completion of a flurry of asset sales, including
that of African phone operator Maroc Telecom of SFR, and its stake
in the Beats headphones company sold to Apple Inc.
Leaving out the impact of the sales, adjusted earnings before
interest and taxes rose 37% on year to EUR234 million for the
fourth quarter.
Sales at the company's remaining assets were essentially flat at
EUR2.97 billion, as sales at the Universal Music Group slid, with
growth in revenue from all-you-can-eat music services like Spotify
dragged down by declines in sales of digital downloads and physical
CDs.
For the coming year, the company said it anticipates flat
revenue for 2015, but expects to increase its net profit by 10%
because of lower restructuring and interest costs.
Vivendi has shrunk drastically over the past years, selling
assets representing more than half of the group's revenue,
including telecoms group SFR, videogame maker Activision Blizzard
and Brazilian telecom group GVT.
By selling the rest of SFR--much earlier than initially
expected--Vivendi is completing yet another exit from a business
after having sold off assets representing more than half the
company's revenues over the past two years in a bid to pay down
debt and refashion itself as a media company.
Executives said they chose to make an early exit because they
feared that low liquidity in the Numericable-SFR business would
make it difficult to leave later. "We figured it was a good time to
sell and to take the cash," Hervé Philippe, the company's chief
financial officer, said in the call with analysts.
The stake sale will add another chunk to Vivendi's already large
cash pile that has left analysts wondering what Vivendi will do
with the money: acquisitions or more shareholder returns.
Vivendi said it ended 2014 with net cash of EUR4.6 billion
compared with EUR11.1 billion in net debt a year earlier. The
company added that it will plow EUR5.7 billion into dividends and
share buybacks by mid-2017, slightly ahead of the EUR5 billion it
had promised, but that leaves some room to maneuver.
"I know the question is how the group will use the rest of its
proceeds, " said Mr. de Puyfontaine, adding that acquisitions were
possible, but only under "strict financial discipline."
Chairman Vincent Bolloré has pledged to transform the
once-diversified French conglomerate into a pure-play media
company, knitting closer together the company's two remaining
assets: French pay-TV operator Canal Plus and California-based
Universal Music Group. But he has given little concrete indication
what he plans to do to grow the group.
Mr. de Puyfontaine told analysts that it would take perhaps 18
months for the future strategy for the company, including making
its units work more closely together. "The proof of the pudding is
in the eating," he added.
Write to Ruth Bender at Ruth.Bender@wsj.com and Sam Schechner at
sam.schechner@wsj.com
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