Loeb’s Vivendi Investment Primes Battle of the Billionaires
(Bloomberg Opinion) -- If the French billionaire Vincent Bollore had a shortlist of opponents to avoid, the activist investor Dan Loeb would feature prominently.
The Bloomberg News report on Monday that Loeb’s fund Third Point has built a “substantial” stake in Vivendi SA raises the prospect of a meaty activist fight for control of the media conglomerate that Bollore has run since becoming the biggest shareholder seven years ago. To avoid such a battle, he may need to make more concessions to existing shareholders.
It now has three activists: Loeb joins Milwaukee-based Artisan Partners and London-based Bluebell Capital Partners in the shareholder register. Loeb hasn’t yet said what his plans are for Vivendi, whose businesses span pay-TV, advertising, publishing and music. But Bollore’s plan to list Universal Music Group, the record label whose roster includes Taylor Swift and Elton John, as a standalone company in Amsterdam seems to have created the impetus for the agitators to get involved.
Activist campaigns have started to enjoy success in France. Efforts last year by mall owner Unibail-Rodamco-Westfield to raise new debt to brace itself for the impact of Covid-19 were voted down by investors after activist resistance; and Bollore himself teamed up with an activist fund to successfully push through governance changes at Lagardere SCA, a smaller media conglomerate, this year. This is a marked change in a country where many of the leading businesses are controlled by a coterie of Parisian elites who are wont to bristle at arriviste campaigners.
With a market capitalization of 35 billion euros ($42 billion), Vivendi makes for a big prize. Bluebell and Artisan have raised fair questions about the tax implications of the plan to spin off UMG. They’re also concerned that Bollore might use the proceeds of the sale of a 10% stake in UMG, to a SPAC led by Bill Ackman, to fund a buyback of Vivendi shares. That could extend Bollore’s control over Vivendi, so the activists are instead seeking a special dividend to shareholders to offset the tax payments incurred by the UMG spin-off. That seems a reasonable request.
The key question is whether Loeb might seek even more. He’s unlikely to sniff at the more favorable deal terms for the record label deal sought by his fellow activists. Things will start to get interesting, however, if Vivendi continues to trade at a discount to the sum of its parts after the UMG listing. Conglomerate discounts are activists’ bread and butter.
Bollore has never convincingly explained why it makes sense to have the Canal+ pay-TV station, Havas advertising agency, Editis publishing house and Gameloft video games business under one roof. That makes it conceivable for Loeb to push for further divestments. The growing appetite for streaming video content could make Canal+ particularly attractive.
If Vivendi’s discount is successfully eliminated, however, then Loeb may have good reason to walk away, having made a healthy return on his initial investment that was made some months ago.
Hedge funds often sense opportunity in big corporate events like a demerger. Bollore, ever the wily boardroom operator, will need to tread a careful path to avoid a set-to with Dan Loeb, a similarly gifted sparring partner.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.
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