Investors hope sales strategy will be unveiled
Perplexed Vivendi Universal watchers — which includes just about everybody on Wall Street and showbiz these days — are hoping the conglom will lift the shroud of obscurity surrounding its future plans at its annual meeting in Paris today.
At the very least, they’re hoping for an explicit timeline and procedure for how bids for Viv U Entertainment assets might proceed.
“Frankly, it’s a story that people are getting bored with,” Sanford Bernstein analyst Michael Nathanson said of the plodding Viv U sale saga. For shareholders, Jean-Rene Fourtou’s cagey approach has neither helped their depleted fortunes nor attracted the number of bidders for he had hoped for. “The stock is basically ‘uninvestable’ right now.”
Any kind of strategic enlightenment about the fate of Viv U’s U.S. entertainment businesses, the sale of which could be subject to huge tax liabilities unless they are flogged off all in one go, tops investors’ wish list, along with news on a possible sale of the games unit. Gotham-based Take-Two Interactive is the latest company reportedly sniffing around VU Games, along with a host of private equity vultures who are thought to value the software unit at far less than the $1.6 billion the Gallic conglom would like to get for it.
Behind the music?
Oil billionnaire Marvin Davis and ex-Universal exec Brian Mulligan have offered somewhere “south of $20 billion” for the VUE package of Universal Studios, USA Networks and Universal Music, and are believed to be in the early stages of due diligence.
But although due diligence has started, with detailed financial information from the film, cable TV and music group at last being proffered to prospective buyers, French sources say the conglom is now considering holding onto the music division. Some believe that UMG, the moneyspinning Gallic telecom company Cegetel and the beleaguered Canal Plus Group pay TV operation could form the group’s three principal activities going forward. The “will they or won’t they” speculation about music has become infuriating, say other analysts, who doubt the company would opt to keep the unit if a buyer could be had.
“The movie studio is the really hard sell,” said Nathason, who believes that if they don’t accept the Davis offer, Viv U would be forced to bundle the studio in with the other, more highly valued entertainment assets and accept a lower price to get it out the door.
Viv U’s annual meeting in Paris today marks Jean-Rene Fourtou’s first face-to-face with shareholders since taking over from ousted conglom chairman Jean-Marie Messier last year.
At last year’s meeting Messier was booed by small investors angered over the plummeting value of Viv U’s stock.
Despite Fourtou’s success in slashing Messier’s debt legacy by some $7.69 billion via asset sales, the share price has continued to nosedive, losing more than half its value since last April.
Fourtou will be under pressure today to prove that he has more in mind than merely selling off the family silver piece by piece to the highest bidder.
He’ll also be put on the spot face over plans to issue 35 million new stock options — 3.5% of Viv U’s the capital — over the next 10 years.
Colette Neuville, head of the minority shareholders’ watchdog ADAM, told Daily Variety: “It is unreasonable.”
The ADAM and other shareholders have launched lawsuits on both sides of the Atlantic against the new management over its financial information.
Indeed, late on Monday one shareholders’ association was trying to get the Appeals Court to put off today’s annual meeting to a later date.
Lawyer Frederik-Karel Canoy, representing the small shareholders’ group APAG, told Daily Variety: “People haven’t got their money back under Fourtou, yet he keeps on selling and selling. Soon Vivendi Universal’s going to be an empty shell.”
“There is going to be a lot of anger at the annual meeting — if it goes ahead.”
Viv U is also facing contentious legal attacks from two strategic shareholders, John Malone’s Liberty Media and Barry Diller’s USA Interactive, The company insists the legal actions are being used as leverage tactics as both companies explore ways to maximize the long term value of their positions in the company or even to purchase the assets themselves.