Billionaire Bollore Hasn't Retired. He's Relocated

(Bloomberg Opinion) -- Just as Vincent Bollore ostensibly steps back from Vivendi SA, he’s laying a path which should see him secure greater control over the French media conglomerate. There’s even a roadmap to obtain a majority stake.

A year after his son Yannick succeeded him as Vivendi chairman, Bollore Pere is handing his board seat to younger son Cyrille, the firm announced Thursday. At the same time, it revealed plans to buy back as much as 25 percent of its stock. The news sent the shares up the most since 2016 on Friday.

Vincent is still chief executive officer and chairman of the family holding company, Bollore SA, which owns 24 percent of Vivendi. If he decides not to participate in the buyback by selling any shares, and the full 25 percent is repurchased, then the size of the Bollore stake could increase to about 32 percent, since Vivendi has said it will cancel any shares it acquires.

More intriguingly, further repurchases could follow. Vivendi is planning to sell a 49 percent stake in subsidiary Universal Music Group, the world’s biggest record label. The proceeds, which could exceed 15 billion euros ($16.9 billion) will “largely” be used for share buybacks, CEO Arnaud de Puyfontaine told investors in a conference call. Crucially, those repurchases are separate from the program announced Thursday.

Billionaire Bollore Hasn't Retired. He's Relocated

Assume the company were to use 12 billion euros of the funds from the UMG sale for buybacks, and the shares are bought back at 25 euros apiece, the current price cap that Vivendi proposed for the 25 percent repurchase. In that case, the Bollore stake in the company could ultimately top 60 percent. That’s an extreme eventuality, since if the stock climbs beyond 25 euros, then fewer shares can be acquired in the buyback.

But 25 euros is still higher than analysts’ average 12-month target price, suggesting there’s limited room for a further increase. At the very least, it demonstrates how eminently feasible it is for the family’s holding to broach 50 percent of the share capital.

Such a majority stake would allow Bollore SA to consolidate Vivendi onto its balance sheet. That would reduce the holding company’s stretched debt ratios. While Bollore’s net debt currently represents 2.35 times earnings before interest, taxes, depreciation and amortization, Vivendi’s totals just 0.46 times Ebitda. I’m sure the family would be happy to dilute the former with the latter.

The move would also give Vivendi shelter to pursue Bollore’s vision for a media giant where a publishing business, film and TV studio, music label and marketing agency feed off each other in a virtuous cycle. I remain sceptical of that model’s coherence. But if it’s largely Bollore’s own money at stake, then he’s welcome to forge ahead.

Vincent Bollore can be a riddle wrapped in a mystery inside an enigma: it's incredibly hard to discern what he's up to. But don’t be misled by his apparent exit stage left. He’s still very much running the show.

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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