September 11, 2013 / 4:26 PM / 4 years ago

UPDATE 2-Vivendi says to decide on SFR spin-off early 2014

* Board votes to study split of telecom, media assets

* Biggest shareholder Bollore named board vice-chairman

* Decision on split to be made by early 2014

* Vote on split may take place at 2014 shareholder meeting

* Bollore says split has his ‘total support’

By Leila Abboud and Christian Plumb

PARIS, Sept 11 (Reuters) - Vivendi said it aimed to decide early next year on whether to spin off its struggling French telecoms unit SFR as the once-sprawling conglomerate seeks to remake itself as a media group focused on music and pay-TV.

Vivendi set the deadline for a decision on a split between media and telecoms and also named its largest shareholder Vincent Bollore as vice-chairman of its board in a bid to defuse a boardroom row.

The French conglomerate is selling most of its Maroc Telecom and Activision video game businesses as part of a broader overhaul, though Bollore said in a newspaper interview that no further asset sales were being considered.

“I think the demerger is an attractive project and it has my total support,” Bollore told business daily Les Echos, adding that he would remain a shareholder in the two companies after the split.

Bollore, a French corporate raider and industrialist, clashed with Vivendi’s powerful chairman Jean-Rene Fourtou over naming a new CEO, as he sought more influence over its future.

Bollore even floated his own name as a CEO candidate before pulling out on Wednesday in exchange for an agreement that Fourtou would step aside as chairman by summer 2014, people familiar with the situation earlier said.

Vivendi has now made Bollore the official number two on the board, putting him in line to take over when Fourtou leaves. The announcement, along with Bollore’s comments, may put to rest some concern among investors that Bollore did not agree with Fourtou’s plan to split up the company.

Bollore told the paper the group was not searching for a new chief executive and also denied that he planned to merge advertising agency Havas into the new Vivendi media company, a scenario often mooted by analysts and the press. Bollore owns 36.5 percent of Havas.


“The team will remain the same,” he said. “The split-up of the company will create two structures and today we need to prepare two teams.”

Investors have shown little enthusiasm for Vivendi’s stock, sending it 1.5 percent lower this year even as France’s benchmark CAC40 index has gained 13 percent. Still, at least one analyst said the agreement to proceed with a split looked like a step in the right direction.

“If they feel SFR’s not ready for a split they could always back out of it,” said Kepler Cheuvreux analyst Conor O‘Shea. “But there’s certainly tangible progress here in the whole portfolio restructuring situation.”

SFR’s earnings before interest tax and depreciation have been falling since 2010. The split that Vivendi is envisaging would leave SFR, the second-biggest telecom operator in France, an independent company to compete with Orange and Bouygues.

The media company would include Universal Music Group and pay-TV provider Canal Plus to create “a new international media group based in France.”

Before such a split could be done, Vivendi would have to pay down its debt pile using the proceeds from the sales of its video games maker Activision Blizzard and Maroc Telecom. Taking into account disposals, Vivendi’s net debt will drop to 6.5 billion euros from 17.4 billion euros as of June 30, the company said last month.

The company said the split “would create significant value to shareholders as they would have the opportunity to invest in two clearly differentiated vehicles evaluated according to the specifics of their respective sectors.”


But there remain doubts about how attractive SFR will be on its own, with some raising parallels with French books, records and electronics retailer Fnac, whose shares tumbled after it was spun off from luxury goods group Kering - formerly called PPR - earlier this year.

“This means the focus will be on how to get SFR into better shape (earnings to bottom out in 2014) so that you can put forward a split, to create an attractive Vivendi Telco entity and avoid a repeat of the Fnac situation post-spin-off from PPR,” O‘Shea said. “This is especially necessary as it is commonly believed, rightly or wrongly, that Bollore is unlikely to be a natural long-term holder of SFR.”

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