Vivendi has secured the support of its shareholders to divest its largest company Universal Music Group into a separate company, which will leave the group controlled by billionaire Vincent Bolloré focused on traditional media in Europe.
Tuesday’s vote paves the way for Vivendi to distribute 60 percent of the world’s largest music label to its shareholders in what’s known as in-kind distribution. The label behind artists such as Taylor Swift and Billie Eilish will become a stand-alone company recently valued at 35 billion euros, with a listing slated for September on Euronext in Amsterdam.
After these moves, a consortium controlled by Chinese Tencent will own 20 percent of the new independent company UMG, Bolloré’s personal holding company will own 18 percent and Vivendi 10 percent.
A blank check company controlled by hedge fund billionaire Bill Ackman also recently bought a 10 percent stake in UMG and will distribute it to its shareholders after listing.
The vote is a big victory for corporate raider and industrialist Bolloré, who entered Vivendi for the first time in 2012 when he sold two small television channels to the French group in exchange for shares.
He then gradually built up his stake in order to take effective control of the group, becoming Chairman of the Board of Directors in 2014. The businessman, for whom the Bolloré Group manages transport and logistics in Africa, chaired a series asset disposals that have taken Vivendi out of video games and telecoms. much of the proceeds being returned to shareholders, including himself.
In 2018, he passed the presidency of Vivendi to his son Yannick Bolloré, but remains a driving force of the group. The Bolloré holding company holds 27% of Vivendi shares and controls 29.73% of the voting rights.
Several activist investors such as Capital Bluebell and Third point had taken stakes in Vivendi ahead of Tuesday’s vote, the former criticizing the terms of UMG’s separation. However, both had stopped before calling on shareholders to block it.
Activists had to face an uphill battle to thwart the move or change its terms because Vivendi only needed a simple majority of shareholders to approve it.
Vivendi also won a separate vote on a resolution, which activists opposed, which gives the group an option to buy back up to half of its share capital for a maximum price of € 29 per share after the transaction. UMG.
Proxy consultancies ISS and Glass Lewis had recommended voting against the resolution, arguing that it might not be in the best interests of minority shareholders. Bluebell Capital had warned that Bolloré could use this tool to increase its stake in Vivendi without making a public tender offer as would usually be required by French securities law when a shareholder owns more than 30% of a company. .
Following the separation of UMG, Vivendi’s remaining businesses will include pay-TV operator Canal Plus, advertising agency Havas and book publisher Editis. It also owns a 29 percent stake in the French media and distribution group Lagardère, and a 24 percent stake in Telecom Italia.