Investors Stateside in Vivendi Universal may be popping champagne corks later this week as the showbiz conglom seems close to cutting ties with the water utility and waste management business.
It’s the likeliest and most logical move for embattled Viv U and chairman-CEO Jean-Marie Messier as the company faces intense pressure to pay down debt and boost its share price. Messier is expected to outline a debt reduction strategy at a board meeting in New York tomorrow. That strategy may well center around reducing Viv U’s stake in publicly traded Vivendi Environnement from 63% to under 50%.
A sale could bring in several billion dollars and will not face particular opposition in French political circles as long as the stock stays in French hands. And along with the immediate financial gain, a transaction would carry valuable intangibles, like a surge in approval from Wall Street analysts and fund managers who never understood the environmental assets and weren’t interested in following a conglom with such disparate businesses.
Viv U, parent of Universal Studios and Universal Music, will be able to deconsolidate Vivendi Environnement on its balance sheet if its stake falls below 50%. Viv U as a whole would shrink significantly, since environment provides half of its revenue and profit. It’s not clear if reducing its stake in Vivendi Environnement would be just a first step in divesting the unit altogether.
Some on Wall Street would also applaud Viv U’s unloading the telecom business Cegetel, the Internet biz led by Vizzavi and Canal Plus’ Canal Technologies division.