Bolloré: interesting points from the independent expert and presenting bank report on the tender offer. Part 1.

or what are the different ways to make sure that an offer appears to be fair?

Who is bringing to the offer within the Bolloré Galaxy and the board members?

Here is the answer:

So at first we only have Compagnie de l’Etoile des Mers (0,34% capital ownership).

But it is then necessary to have a look at section 6 to see what are the intentions of the board members:

Three administrators are not bringing to the offer: Sébastien Bolloré, Alexandre Picciotto and François Thomazeau.

If Alexandre Picciotto is not bringing to the offer then Orfim which owns 5,26% of Bolloré is ot bringing to the offer. This is important as the Picciotto family have been with Bolloré since the beginning…

So if Orfim isn’t bringing to the offer it is an indication that Bolloré is probably worth more then 6 €.

Presenting bank’s methodologie to justify the price are weird

To determine a faire price, the presenting bank used the following approaches:

• reference to the Bolloré stock market prices : no comment as this approach is just completely out of sync.

• reference to target prices of financial analysts: completely off topic as none of them take into account the self controling loop.

• reference to the prices of recent transactions on the Bolloré capital: off topic too. If Bolloré SE and Compagnie de l’Odet have been buying back shares it is a clear sign that the price is really interesting and not a sign of fair value.

• SOTP approach: in the valuation there are three criterias which are off topic and clearly help to keep the fair value low and show a lack of understanding of the offer:

  • Vivendi and UMG were valued by using their average one month share price… Average share price is just not fair value…

  • Self controling loop was valued by transparency by using the Odet and Bolloré share price… once again share price isn’t fair value

  • A 30 to 35% holding discount: yet business is being simplified (we are probably going toward a media focused company. And as time goes by I think that more and more people understand the structure…

    • the holding sample to determine the discount is well … questionnable… Peugeot Invest doesn’t have the same business units at all… Eurazeo and Wendel don’t have the same business at all…

  • A 12,6% illiquidity discount was applied to the self controlling valuation. In other words, we have a double discount used on the valuation of the self controlling loop:

    • discount by using the share price and not the fair value of Odet and Bolloré ….

    • on top of that there is a 12,6% illiquidity discount which is applied

  • Bolloré logistics is valued at 4 454 M€ but we know that CMA CGM is offering 5 000 M€. It is true that this offer came after the report.

• Net asset value method was discaded yet if it is used we gave a 7,87 € per share NAV…

First part is over. In a second post I will look into the assumptions of the independent expert and well it will be fun!

Cheers!

Jeremy

In the meantime, thanks again for signing up and feel free to talk to your friends / fellow investors about the French Hidden Champions Substack. You can also reach out by email or by DM on Twitter @FoxCastlehold.

Disclaimer: The above article constitutes the authors’ personal views and is for entertainment purposes only. It is not to be construed as financial advice in any shape or form. Please do your own research and seek your own advice from a qualified financial advisor. The authors may from time to time hold positions in the aforementioned stocks consistent with the views and opinions expressed in this article. Disclosure – I hold a position in the Bolloré Galaxy at the time of publishing this article (this is a disclosure and NOT A RECOMMENDATION).