* Saviour in 2002, chairman Fourtou back at helm
* Fourtou to sketch out strategy, explore asset sales
* Bankers say the business model is dead
By Sophie Sassard and Leila Abboud
PARIS, Aug 5 Vivendi has called on
72-year-old chairman Jean-Rene Fourtou, who saved the group from
bankruptcy a decade ago, for one last service: to write what
could be the once-proud French telecom-to-entertainment group's
Fourtou let long-time CEO Jean-Bernard Levy go in late June
after disagreements over whether asset sales or a break-up were
the best way to reverse a deep share slump, and the group is in
no rush to find a new chief executive.
With Fourtou now firmly in charge, Vivendi is in what the
chairman calls a "no taboo" era and could eventually sell off
huge chunks of its six business lines, which include video
games, pay-TV, music and telecoms and have failed to produce any
benefits by being together.
A shrewd dealmaker and avid sportsman, Fourtou made his name
as chief executive of pharmaceutical maker Aventis before he was
parachuted in to run crisis-hit Vivendi in 2002, where he kept
creditors at bay and oversaw about 12 billion euros ($14.8
billion) in asset sales, including book publishing.
Today, shareholders are betting that Fourtou can pull
something out of the hat again. Vivendi shares are up about 10
percent since Levy bowed out.
One shareholder who knows Fourtou said the fact that much of
his family's wealth is tied up in Vivendi shares meant he would
not shirk from tough decisions.
"If restoring value to shareholders involves a break-up of
the business, he will do it," said the shareholder. "He is a
pragmatic man and a real business leader."
Fourtou will rely on help from long-time allies among
France's business elite, such as Axa founder Claude
Bebear, who is no longer on Vivendi's board but is still
involved, and Henri Lachmann, chairman of Schneider Electric
, a veteran board member.
The three are internally dubbed the "grandpa gunmen",
according to Les Echos newspaper.
A Paris-based banker suggested Space Cowboys as a more
appropriate sobriquet, after the film of that name, starring
Clint Eastwood and James Garner as astronauts called out of
retirement for one last mission.
In recent weeks, a parade of investment bankers has visited
the company's plush Paris headquarters to pitch to Fourtou and
his lieutenants on sales of assets including games unit
Activision Blizzard, Brazilian telco GVT, and Maroc
The names of several candidates to become the new CEO,
including ex-Goldman Sachs banker Yoel Zaoui, GE Europe head
Clara Gaymard, and former Apple Europe chief Pascal Cagni, are
circulating internally, according to people close to the matter.
But hiring a new CEO to lead the management committee that
sits on top of Vivendi's six business units, which each have
their own bosses, is not an immediate priority. The committee
itself was cut from seven to two members when Levy left, in a
sign that some analysts and investors interpreted as paving the
way for asset sales or a break-up.
A banker who has worked with Vivendi said Fourtou's current
priority is to redesign strategy, cut costs, focus on cash
generation and debt reduction so that the group can announce
disposals or other measures to please frustrated shareholders
"He will spend the next six coming months at least sketching
out a new strategy and then find a CEO to enforce it."
SHADOW OF 2002
Raised in southwest France in a middle-class family with a
mathematics professor for a father, Fourtou earned his entry to
the business elite at the country's top engineering school
L'Ecole Polytechnique, where he met Bebear. Their close
friendship would shape Fourtou's career.
It was Bebear who lured him to Vivendi in 2002 when the
company, which traces its roots to a water utility founded by
Napoleon III in 1853, was on the brink of bankruptcy after
former CEO Jean-Marie Messier spent with abandon in pursuit of
his vision of an integrated telecoms-and-content empire.
Fourtou was known for his restructuring skills. In the
1980s-1990s as CEO of Rhone-Poulenc, he split up the company's
chemical and pharmaceutical businesses and later engineered a
merger with a German rival to create Aventis, then Europe's
At Vivendi, he convinced France's top banks not to cut off
the group's credit lines and organised fire sales of its
publishing and non-French pay-TV units. He shuttled back and
forth to Hollywood to untangle Messier's ill-fated foray into
entertainment, auctioning off Universal Studios and USA
But Fourtou showed he could do more than just sell. He
outmanoeuvred partner Vodafone to take control of French telco
SFR, just as Vodafone was trying to do the same while Vivendi
was on the ropes.
"Fourtou is able to take quick decisions and be where no one
would expect him," said a banker who worked with Vivendi during
the period. "Buyer one day, seller the next, while always
creating value. He's capable of really bold things."
Fourtou amassed a pile of Vivendi shares during this period
and was criticised in the French press for his extravagant
lifestyle and growing pay packages. He used Vivendi's plane to
fly to Morocco where he has a second home with his wife, a
deputy in the European Parliament, wrote Liberation newspaper.
Yet even once the crisis was over, Fourtou and his successor
as CEO Levy were never able to prove to markets that the
disparate businesses were worth more together than apart.
For example, cash cow SFR rarely worked with pay-TV unit
Canal+, even though it marketed TV with its broadband and phone
packages, and when SFR launched a music service it did so with
an outside company instead of working with in-house Universal
A senior banker who has advised the board said Fourtou and
the management had long tried to mask that the company was more
a "fund" of unrelated businesses than a cohesive whole.
"Now they've finally understood that they can no longer be
in denial. But it's already too late. Vivendi is now seen as a
distressed company. Lack of vision, lack of anticipation, that's
a bit the story of Vivendi's life," he said.
BOLLORE AS CATALYST
With shares nearing nine-year lows this spring and still no
synergies in sight, investors' patience was running thin.
Fourtou realised this and in March penned a letter to
shareholders to say that all strategies to erase the dreaded
conglomerate discount were now on the table.
He also welcomed the arrival of French industrialist Vincent
Bollore as a Vivendi shareholder. The 60-year old corporate
raider will join the board this autumn after taking Vivendi
shares in exchange for two of his TV channels, sparking investor
hopes that he would help with deal-making and restructuring.
For now, investors seem content to give Fourtou some time.
"There is no urgent financial pressure; Vivendi's businesses
still generate strong cash," said Marine Michel, portfolio
manager at Montsegur Finance, which owned Vivendi shares as of
June 30, according to Reuters data. "I think the group has the
time to make the decisions that will be best for it."
Bankers pitching for Vivendi business agreed that the group
was likely to take its time figuring out what to sell and at
what prices. Goldman Sachs and Barclays recently searched for
buyers for its 60 percent stake in Activision, worth about $8
billion, but found no takers at the price it wanted.
Vivendi also began exploring a sale of Brazilian telecom
unit GVT, which could bring in around 8 billion euros, Reuters
revealed in mid-July.
Jean-Rene Fourtou was not available for an interview for
this story, and the company won't talk about asset sales.
"Vivendi wants to take its time to review all its strategic
options," a spokesman said.
The senior banker who advised the board was more
"The business model is dead, and the dismantling is now
unavoidable. They have five years to sell everything."