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* War chest of up to 10 bln euros after selling SFR
* Canal Plus, Universal Music face low-growth prospects
* To look at targets outside pay-TV and music - sources
* Bollore to take reins on June 24
By Leila Abboud, Pamela Barbaglia and Anjuli Davies
PARIS/LONDON, June 19 If Vivendi was to
draw up a personal ad to find its perfect partner it would read:
"Freshly divorced from telecoms, 160-year-old holding
company seeks attractive media businesses to spark growth.
Pitches welcome, contact major shareholder Vincent Bollore."
After selling three of its six businesses in the past year
in a strategy overhaul, Vivendi, one of France's largest
companies, has up to 10 billion euros ($13.6 billion) to remake
itself depending on how much debt it is willing to take on.
People close to the company say Vivendi is likely to target
acquisitions in different areas to its French pay-television
operator Canal Plus and Universal Music Group, which are already
too big in their respective markets to expand further.
Bankers are honing pitches to buy U.S.-based TV companies
like AMC, Starz, and Scripps Network
Interactive, or a movie studio such as Lionsgate
, said two of the people. If U.S. valuations are too
high, Vivendi could scoop up TV and movie producers in Europe or
look to new areas such as live sports or concerts, said one of
Vivendi will also have to do something with its Brazilian
broadband unit GVT, which does not fit with the new focus on
media, the people said. This business, valued from 4.9 to 5.4
billion euros, could be sold or merged with local mobile player
Telecom Italia's TIM. Vivendi says GVT is not for
Vivendi has so far said nothing about its plans, despite
being six months into an internal review led by future chief
executive Arnaud de Puyfontaine, who joined from magazine group
Hearst in January.
That is because Vincent Bollore, Vivendi's second-largest
shareholder with a 5 percent stake, will become the real boss
once he takes over as board chairman at a June 24 shareholder
The 62 year-old tycoon, who built a family owned port and
logistics business in Africa and raided blue-chip companies like
ad agency Havas, has a reputation for playing his
cards close to his chest. He has not even told Vivendi
executives what he wants the company to do after pending asset
sales are completed, said the two people.
As a result, Vivendi is not expected to move on deals until
late this year or next, they said.
"We don't need ideas; we have lots of them," said one
"But no one really knows if Bollore wants to recenter the
group around Canal Plus, sell off music, or do something else
... honestly the guy is a total mystery."
A Vivendi spokesman said the company was in no rush to do
deals and would take time to consider its options.
Since declaring a "no taboo" era in spring 2012 aimed at
reversing a share slump, Vivendi has sold its video games arm
Activision Blizzard, Maroc Telecom and French
telecom operator SFR.
Investors, who will get close to 5 billion euros in
dividends and share buybacks by the end of next year, have been
rewarded for their patience. Shares that were trading at 12
euros when the overhaul started have settled at 19 euros after
hitting 21 euros in February, the highest level in three years.
Vivendi's three remaining businesses - Universal Music, GVT
and Canal Plus - face relatively modest growth prospects and
generate little cost savings by being kept together. JP Morgan
sees sales at Universal and Canal Plus growing 1.7 percent on a
compound annual basis from 2014 to 2016. GVT will grow a bigger
10 percent on a compound annual basis from 2014 to 2016, but
does not yet generate cash.
"Vivendi must decide if it wants to forge a coherent media
company with a real strategy or if it is content to be a holding
company with a collection of assets," said Gunjan Dixit, an
analyst at ratings agency Moody's.
Bernstein Research analyst Claudio Aspesi said the prudent
course would be for Vivendi to buy companies to strengthen
Universal and Canal Plus. "While the temptation will be to
acquire flashier digital media businesses, the risk is real that
Vivendi overpays for targets that bring few synergies," he said.
Although Universal's market share is too big in recorded
music to grow further by acquisitions, it could branch out into
complementary areas like merchandising or doing more with a
Vivendi-owned ticketing business called Digitick. Expanding into
concert promotion or live events would be a good way to bolster
Universal, said a sector banker.
Canal Plus, France's biggest pay-TV operator, could add
additional countries beyond the current ones of Poland, Vietnam
and some of French-speaking Africa.
Canal Plus has seen subscribers defect to Al Jazeera-owned
sports channel beIN Sports, and also faces new competition from
Internet-based players like Netflix, which will launch
in France this autumn. Further pressure could come if Rupert
Murdoch finalises talks to combine his European TV interests in
a single company led by Britain's BSkyB.
However there are a limited number of pay-TV targets for
Vivendi- Mediaset Premium in Italy and Digiturk in Turkey are
two - and little evidence that being in pay-TV in different
countries generates cost savings since content rights are local.
"There is more value in acquiring a Middle Eastern satellite
player like OSN, which is also present in North Africa, than a
US-based pay TV specialist," another banker said.
"A takeover of OSN would bridge the gap with viewers in
North Africa and offers higher-growth opportunities."
Bollore could well be tempted to look further afield in
One person who met Vivendi recently came away with the
impression that the entrepreneur favoured a bold approach.
"Vivendi will favour a multibillion acquisition that could
transform its media business and give it access to the digital
universe," said the person.
"Bollore's strategy is to look at a single transformational
deal rather than a string of mid-market ones."
($1 = 0.7368 Euros)
(Additional reporting by Gwenaelle Barzic, Sophie Sassard, and
Nicola Leske; Editing by Erica Billingham)