An activist Hedge Fund investor in Vivendi is causing trouble – first demanding that Universal Music Group is sold, and now that it is spun-off into an independent company.
American Hedge Fund, P. Schoenfeld Asset Management (PSAM), which owns slightly less than 1% of Vivendi, has grown impatient with the company’s ever-growing cash reserves. It wants to see €9bn redistributed to shareholders as dividends.
According to Vivendi – which was moved to put out a statement yesterday – it received a letter from PSAM, headed by US investor Peter Schoenfeld, asking for the sale of Universal Music Group (UMG) on December 22.
Vivendi said in its note to the press: “UMG is not for sale and, along with Canal+ Group, constitute the strategic pillars in the building of a major industrial media and content group.”
Arnaud de Puyfontaine, Chairman of Vivendi’s Management Board, recently said that UMG would be sold “over my dead body”.
However, PSAM now appears to be submitting new proposals for UMG in a presentation seen by the Financial Times.
In suggestions it will present to fellow shareholders next month, PSAM suggests that UMG’s long-term profits and growth will be “obscured” as long as the business is inside Vivendi, adding that UMG “would benefit from operating and structural advantages as an independent company”.
PSAM puts a €9bn valuation on UMG – not far removed from the €10bn reached by Credit Suisse in a report last year.
It estimates that, based on operating cash flow, UMG’s enterprise value will increase to €12.3bn by 2018.
PSAM is demanding that Vivendi returns €9bn to investors of €15bn cash obtained from recent sell-offs, reports the FT. Its proposals will be debated by investors at Vivendi’s annual shareholder meeting in April.
Two years ago, Vivendi rejected an $8.5bn offer for Universal Music Group from Japanese telecoms giant SoftBank.
And earlier this year it was revealed that Liberty Media Chairman John Malone had enquired about buying UMG.
Universal Music Group is at the centre of Vivendi’s portfolio alongside French TV network Canal+.
In recent years, Vivendi has sold off the likes of video games company Activision and its 20% stake in French telecom SFR.Music Business Worldwide