I am mostly in line with your assesment. Some comments :
On canal plus, I'd give 5B€-8B€ valuation, so 6B€ seems ok
on Media For Europe, Vivendi still owns a 20.76% stake but the share price is still way below the agreed minimal treshold of divestment. As shareholder of MFE, I can't wait for this treshold to be crossed :) but to be conservative, MFE current share price is about 0.6€ (0.50€ for MFEA and 0.7€ for MFEB)
I think you should also count a 10-15% discount for "holding" (fee of management) and "controlled company". 16€ should be a lowball valuation.
I totally agree with the fact that VB is highly upredictable ... and he could really pivot (like Powell) and launch the Vivendi buyout in the coming months.
At the moment, hVB divestments were very astuce. He managed to pull down the share price of Vivendi 20% lower from 10€ to 8€ which will lower the market exigence regarding the potential buyout price should he chose to launch it.
For MediaForEurope, it is a good point but maybe staying a shareholder and with the succession we could imagine a partnership. Until the threshold is hit, time could maybe offer a different issue.
For the holding discount, we could add one but when we see that all the assets are centered towards building a european, african and asian "netflix", the holding aspect could be rebutted.
For the corporate costs them into account (192 M€) but could probably add some but at the same time we know that VB likes to reduce unecessary costs.
We have an additional margin of the safety witht the UMG and Lagardère fair value which I used. I think that UMG is worth more then 25€ (28-29€ would not be excessive + 50% of net income is distributed giving additionnal cash for Bolloré to deploy). Lagardère's fair value is probably closer to 29 €.
FL entertainement seems to have a nice dynamic too.
1. I agree with UMG appraisal. Lagardere may hopefully go bit higher in the coming years.
2. Unfortunalety, I can't see the "european netflix" building which would induce the write off of the holding discount. Assets are still way to disparates :
- marketing with havas
- gaming with gameloft
- music with UMG
- travel with Lagardere Relay
- publishing with Lagardere Hachete
- ticketing
- betting with FL entertainement
- etc ... and I don't include all other listed assets !
These are way out of the scope of an integrated and pure video group !
On the MFE front, I don't think Bollore and Berlusconi son's can manage an agreement for merger. I think VB stake is at best frozen for some time. I will be frozen with VB there too ... but in the meantime, I am happy to collect the hefty dividend of MFEA !
3. Vivendi is basically an asset story with Bollore overhang which is THE major catalyst to come. It could be good or bad ... but for sure, Bollore will manage to get the best deal for himself !
Still, I think current Vivendi shareholders can still have a decent deal on a public cash buy by Bollore. I project an offer around 12€.
The "worst" situation could be that Bollore first reorganise his holdings, then offer an unfair exchange on Vivendi where Vivendi minorities will probably benefit of NO premium.
My main scenario is still a cash buyout on Vivendi. This view is supported by the mountain of cash that VB is holding. At some point, he needs to have his HUGE cash invested and it would be oviously a very good deal to buy Vivendi cash at 12€ per share !
At the time, I think it is impossible for VB to find such large good deal. Maybe there could be some opportunies for him during the next down turn.. but buyout are a tricky exercice :
- either you buy expensive and hope to get good synergies
- either you try to grab a "defunct" company close to long term trough. At the moment, these bargain are in the TV space / presse.
From historical references, Bollore ALWAYS prefers the second option.
The "issue" could the "size of these deals". In Europe, I can see only MFE (but situation seems desperate) or maybe the english ITV PLC should the company look for merger ?
The rumors about US investment are IMO very low probabilities due to high prices of these assets.
Alternatively, I can't see Bollore using his cash on buyback. The last offer was quite a failure (only 3% of share tendered ...).
Considering all above, a cash buyout on Vivendi seems the most natural move for me !
Great to exchnge! Holding discount + MFE dicount compared to compromie fair price can be covered by the UMG and Lagardère full FV.
Publishing (Hachette) can help source film production (studio canal) or game production (Gameloft) which can then be diffused (C+,MCG...). Show production (FL entertainement) gives content for C+. Its doable but I agree complex.
Big Bollloré cash position will be used in priority to establish a second pilar (BU) at Bolloré level.Could also be used to simplify Bolloré galaxy.
The latest tender offer on Bolloré was a succes imo. I wasn' expecting so much as tender offer was not helped by the announcement just after of the logistics sale which made the tender less attractive.
Offer on Vivendi is being expected by many, pushed by many but will come later. True that at 8€ Vivendi is attractive (disclaimer it is not an investment advice).
thank you
I am mostly in line with your assesment. Some comments :
On canal plus, I'd give 5B€-8B€ valuation, so 6B€ seems ok
on Media For Europe, Vivendi still owns a 20.76% stake but the share price is still way below the agreed minimal treshold of divestment. As shareholder of MFE, I can't wait for this treshold to be crossed :) but to be conservative, MFE current share price is about 0.6€ (0.50€ for MFEA and 0.7€ for MFEB)
I think you should also count a 10-15% discount for "holding" (fee of management) and "controlled company". 16€ should be a lowball valuation.
I totally agree with the fact that VB is highly upredictable ... and he could really pivot (like Powell) and launch the Vivendi buyout in the coming months.
At the moment, hVB divestments were very astuce. He managed to pull down the share price of Vivendi 20% lower from 10€ to 8€ which will lower the market exigence regarding the potential buyout price should he chose to launch it.
Many Thanks!
For MediaForEurope, it is a good point but maybe staying a shareholder and with the succession we could imagine a partnership. Until the threshold is hit, time could maybe offer a different issue.
For the holding discount, we could add one but when we see that all the assets are centered towards building a european, african and asian "netflix", the holding aspect could be rebutted.
For the corporate costs them into account (192 M€) but could probably add some but at the same time we know that VB likes to reduce unecessary costs.
We have an additional margin of the safety witht the UMG and Lagardère fair value which I used. I think that UMG is worth more then 25€ (28-29€ would not be excessive + 50% of net income is distributed giving additionnal cash for Bolloré to deploy). Lagardère's fair value is probably closer to 29 €.
FL entertainement seems to have a nice dynamic too.
Always a pleasure to exchange!
Cheers!
Jeremy
1. I agree with UMG appraisal. Lagardere may hopefully go bit higher in the coming years.
2. Unfortunalety, I can't see the "european netflix" building which would induce the write off of the holding discount. Assets are still way to disparates :
- marketing with havas
- gaming with gameloft
- music with UMG
- travel with Lagardere Relay
- publishing with Lagardere Hachete
- ticketing
- betting with FL entertainement
- etc ... and I don't include all other listed assets !
These are way out of the scope of an integrated and pure video group !
On the MFE front, I don't think Bollore and Berlusconi son's can manage an agreement for merger. I think VB stake is at best frozen for some time. I will be frozen with VB there too ... but in the meantime, I am happy to collect the hefty dividend of MFEA !
3. Vivendi is basically an asset story with Bollore overhang which is THE major catalyst to come. It could be good or bad ... but for sure, Bollore will manage to get the best deal for himself !
Still, I think current Vivendi shareholders can still have a decent deal on a public cash buy by Bollore. I project an offer around 12€.
The "worst" situation could be that Bollore first reorganise his holdings, then offer an unfair exchange on Vivendi where Vivendi minorities will probably benefit of NO premium.
My main scenario is still a cash buyout on Vivendi. This view is supported by the mountain of cash that VB is holding. At some point, he needs to have his HUGE cash invested and it would be oviously a very good deal to buy Vivendi cash at 12€ per share !
At the time, I think it is impossible for VB to find such large good deal. Maybe there could be some opportunies for him during the next down turn.. but buyout are a tricky exercice :
- either you buy expensive and hope to get good synergies
- either you try to grab a "defunct" company close to long term trough. At the moment, these bargain are in the TV space / presse.
From historical references, Bollore ALWAYS prefers the second option.
The "issue" could the "size of these deals". In Europe, I can see only MFE (but situation seems desperate) or maybe the english ITV PLC should the company look for merger ?
The rumors about US investment are IMO very low probabilities due to high prices of these assets.
Alternatively, I can't see Bollore using his cash on buyback. The last offer was quite a failure (only 3% of share tendered ...).
Considering all above, a cash buyout on Vivendi seems the most natural move for me !
Time will tell !
Cheers
Great to exchnge! Holding discount + MFE dicount compared to compromie fair price can be covered by the UMG and Lagardère full FV.
Publishing (Hachette) can help source film production (studio canal) or game production (Gameloft) which can then be diffused (C+,MCG...). Show production (FL entertainement) gives content for C+. Its doable but I agree complex.
Big Bollloré cash position will be used in priority to establish a second pilar (BU) at Bolloré level.Could also be used to simplify Bolloré galaxy.
The latest tender offer on Bolloré was a succes imo. I wasn' expecting so much as tender offer was not helped by the announcement just after of the logistics sale which made the tender less attractive.
Offer on Vivendi is being expected by many, pushed by many but will come later. True that at 8€ Vivendi is attractive (disclaimer it is not an investment advice).
Cheers!
Jeremy
Which catalysator should vanish the discount?
Catalysts:
- Lagardère fully integrated (Vivendi will probably have a high stake with subsidiary offer which will lapse at the end of the year.
- tender offer from Bolloré (next year)
- more M&A
Cheers!
Jeremy
Which catalysator should vanish the discount?
Thanks for the article, however, I only find 10% UMG owned by Vivendi per Bloomberg. how comes the 24.5%?
Hello! in fact, it is /represents 24,5% of the NAV of Vivendi and not the ownership level of Vivendi in UMG. Vivendi owns 10% of UMG.
Cheers!
Jeremy