Vivendi splashes $2.5bn on Havas bid – and says it will help ‘strengthen’ Universal

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Advertising giant Havas is set to have a significant influence on the future of Universal Music Group.

UMG parent Vivendi has confirmed that it is has made a bid to acquire a 60% stake in Havas – the Paris-born agency which operates across marketing, design, digital and corporate communications.

The pricetag: €2.3bn ($2.5bn).


The fine print of the deal should prove unusually easy to sort out.

Vivendi is attempting to purchase the Havas shares from the firm’s current majority-owner, Bolloré Group – which is the vehicle of Vivendi’s own chairman and 20%+ shareholder, Vincent Bolloré. (Who also owns 30% voting rights in Vivendi).

In other words, the most powerful shareholder of Vivendi is recommending that Vivendi buy a majority stake in a company controlled by his other company. For $2.5bn.

Got it?

Oh, and just to add a dash more familial fun into proceedings, Yannick Bolloré – Vicent’s son – is CEO of Havas Group.

He also thinks it’s a great idea.

Vivendi’s offer, of €9.25 per share, works out at an 8.8% premium over the closing price for Havas shares at the time the bid was announced.

Once Vivendi acquires the 60% – a deal it wants done by the start of July – it is expected to launch a tender offer to grab the remaining 40% of stock from listed shareholders.


The big question for the music business: how will Havas joining the Vivendi fold affect its prize asset – and biggest current revenue driver – Universal Music Group?

According to Vivendi, by ‘strengthening’ all of its current subsidiaries.

A presentation distributed to Vivendi shareholders explains that the company’s management believes Havas can add ‘Communication, Data and Consumer Science’ to Vivendi’s overall offering.

This would form the third prong of Vivendi’s strategy, alongside ‘Media, Content and Entertainment’ (the entertainment IP owned/created by UMG, plus video games company Ubisoft) plus ‘Distribution Platforms/Telcos’ (online video site Dailymotion and French TV network Canal+).

“The proposed acquisition will enable Vivendi to strengthen all of its businesses at a time of profound transformation.”

Vivendi note to shareholders

In an additional note to shareholders, Vivendi said: “This strategic transaction will allow Vivendi to accelerate its building of a leading world-class content, media and communications group and will ensure the newly created group a unique positioning in an environment in which content, distribution and communications are converging.

“The proposed acquisition will enable Vivendi to strengthen all of its businesses at a time of profound transformation. In this environment which offers attractive development prospects, in-depth consumer knowledge and strong data analytics capabilities represent a significant competitive advantage.”

It added: “This transaction will enable Havas to leverage Vivendi’s skills in talent management, content creation and distribution. In return, Vivendi will gain access to Havas’s expertise in consumer science, data analytics and new creative formats.”


In an internal memo to Havas staff yesterday, Yanick Bolloré (pictured) wrote that “our [Havas’s] clients expect us to come up with innovative solutions and having privileged access to Vivendi’s prestigious assets would enable us to create unique offerings and services all over the world”.

Universal Music Group announced its financial results for Q1 last week.

The major turned over €1.29bn ($1.4bn) in the three months to end of March 2017, up 14.8% (or 12.7% at constant currency/perimeter) year-on-year.

That represented its biggest first quarter in 15 years, since the €1.37bn UMG recorded in the first quarter of 2002.

The main driver of the Q1 2017 was UMG’s recorded music streaming revenues.

These jumped 49% year-on-year to €467m ($507m) – which represented a slight slowing in streaming growth, percentage-wise, from the 60% rise seen in Q1 2016.

You can read Yannick Bolloré’s email in full below, and watch the newly-released Vivendi corporate video he refers to.


Dear all,

I hope this message finds you well.

Today Vivendi opened negociations with the Bolloré Group to acquire their stake in the Havas Group. Over the past 12 months there has been much speculation around this project in the press as I am sure you are aware.

As you know, the Bolloré Group is our shareholder with approximately 60% stake and has always supported our development. The Bolloré Group is also a shareholder of the Vivendi Group with 30% of voting rights. Havas and Vivendi are both consolidated in the Bolloré Group’s accounts. The Vivendi Group is a major player in the worlds of content, media and communications with prestigious assets such as Universal Music Group, Canal +, DailyMotion, Gameloft and a stake in Telecom Italia amongst others.

I would like to share some thoughts with you on this opportunity.

First of all, I would like to underline that I have chosen to express myself in my role as Chairman & CEO of the Havas Group.

Through this acquisition project, Vivendi expresses its will to become a world leader in content and communications. The Havas Group has a healthy and positive financial situation and would bring to Vivendi its expertise in consumer science, content creation and production and data.

“our clients expect us to come up with innovative solutions and having privileged access to Vivendi’s prestigious assets would enable us to create unique offerings and services all over the world. We have already launched shared initiatives which this operation would accelerate.”

I would like to point out that Vivendi wishes to preserve jobs and to allow us to develop our business in an industry which is undergoing rapid consolidation and is threatened by increasing competition from companies coming from other sectors.

Many of you have often mentioned how this convergence would be attractive for our talents. Our groups evolve in the same environment, some of our teams already collaborate and our cultures are similar and complementary.

Finally, our clients expect us to come up with innovative solutions and having privileged access to Vivendi’s prestigious assets would enable us to create unique offerings and services all over the world. We have already launched shared initiatives which this operation would accelerate.

We are all aware of the importance of having a stable shareholding which ensures our long term development perspectives.

Please click here to download Vivendi’s corporate film and presentation.

It is clear that the closing of this transaction remains subject, among others, to the completion of satisfactory due diligence, the execution of a share purchase agreement between Vivendi and Groupe Bolloré, the consultation with the employee representative bodies and the approval of the relevant competition authorities.

I will obviously keep you up to date with the next steps.

All my very best,

Yannick

Music Business Worldwide

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