Vivendi Mulls Universal Music Spin-Off, Special Dividend Distribution


Vivendi is mulling a plan to spin-off its subsidiary, Universal Music Group (UMG) via a listing and distribute 60% of the share capital to its investors.

Vivendi (OIIF) is seeking a listing of UMG shares on the Euronext NV market in Amsterdam, as early as the end of this year. The French media giant said that the distribution would take the form of a special dividend.

“Vivendi’s leading institutional shareholders have been pressing for a number of years for a split or the distribution of UMG to reduce Vivendi’s conglomerate discount,” the company stated.

Vivendi will hold an extraordinary shareholders’ meeting on March 29 to modify the company’s by-laws and pave the ground for the planned distribution. Following shareholder approval, the media conglomerate will continue to pursue the plan to approve the distribution and targets completion of the transaction before the end of 2021.

Additionally, the company’s management board will propose to pay an ordinary dividend of €0.60 per share for its 2020 fiscal year at a shareholders’ meeting on June 22.

The move comes after Vivendi on Jan. 29 announced the closure of the sale of an additional 10% of the share capital of UMG to a Tencent-led consortium, based on an enterprise value of €30 billion. Vivendi said that it received an “initial favorable response” for the listing plan from the Tencent-led consortium, which now holds a 20% stake in UMG.

On Jan. 26, Societe Generale analyst Christophe Cherblanc resumed coverage of Vivendi stock with a Buy rating and €31 price target (19% upside potential), arguing that the investment case depends on UMG prospects.

Following Vivendi’s updated 2020-2030 global music streaming framework, Cherblanc sees a €26-€35.3 valuation range for the company, which he believes makes a very attractive risk/reward case. (See Vivendi stock analysis on TipRanks)

Firmly in line with Cherblanc, the word on the Street is a Strong Buy consensus rating backed by 8 unanimous Buy recommendations. The average analyst price target of €33.30 suggests upside potential of around 28% over the next 12 months.

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