Vivendi (OTCPK:VIVHY) share worth dipped somewhat put up my earlier put up and has recovered to the identical stage. I consider this dynamic doesn’t mirror the constructive 1Q23 outcomes that VIVHY posted a few weeks in the past. Importantly, there was notable strategic development throughout numerous fronts inside the firm. The outstanding one, in my view, is Canal+ continued effort to mixture video content material, enhancing the platform’s choices and solidifying its place out there.
These strategic initiatives underscore the corporate’s dedication to diversification, and staying forward of the curve within the dynamic industries it operates in. That stated, regardless of all these developments, I consider the inventory worth disconnect is because of the clearance of the Lagardère deal (buyers are in all probability on risk-off mode as a consequence of this) and a possible takeover from its main shareholder – Groupe Bolloré.
My suggestion stays the identical, a maintain ranking for danger hostile shareholders and for buyers with extra danger urge for food to steadily accumulate place on worth dip to take benefit on the pending company actions overhangs.
Earlier than I get into the underlying efficiency, I feel it make sense to clear the elephant(s) within the room out of the best way. Almost about the potential takeover by VIVHY largest shareholder – Groupe Bollore, I see this as upside catalyst (successfully a name choice) that might reward shareholders. It looks as if there’s an growing chance for Bollore to provoke a bid on VIVHY on condition that it’s more likely to promote its Logistics arm. With the gush of capital into the steadiness sheet, Bollore might be prepared to tug the set off, anytime. By way of timing, I might say that the mandatary cancellation of shares could be a set off level for Bollore, although I do suppose there are a couple of methods for Bollore to sidestep being pressured right into a deal. Nonetheless, it could pressure Bollore to decide, which it’d simply be sitting on for now. The following pending motion is the take care of Lagardere, whereas I shouldn’t have a concrete view on how issues will prove, I’m optimistic concerning the proposal that VIVHY has laid out to regulators (confer with earlier put up for my ideas). I nonetheless consider the mixture of those two enterprise will considerably enhance VIVHY income and income (~40+% primarily based on FY22 numbers).
Both manner, it looks as if the one negatives final result from these two actions could be a non-bid motion, and a failed acquisition (bid don’t undergo), and the inventory is likely to be harm somewhat as particular scenario buyers go away the inventory. Submit the shakeout, I really suppose it is going to profit core fairness shareholders are they the market will now worth the inventory primarily based on the enterprise fundamentals.
VIVHY carried out positively throughout all its segments, in my view, albeit Havas got here in weaker than anticipated. Havas grew by only one.9% organically on account of a weak North America and the anticipated materialization of undertaking delays in 2H23. Nonetheless, I feel it is necessary to focus on the sturdy business momentum alongside sizable funds positive factors. The spotlight is on Canal+, natural development for Canal+ was 1.2%, with Pay TV in France growing by 1.4%, Worldwide being roughly flat, and StudioCanal growing by 9.1%. Concerning Canal+, I feel issues are beginning to lookup, and I am optimistic about the way forward for the service.
To place issues into perspective, greater than 60% of VIVHY’s complete subscriber base comes from markets exterior of France, and the corporate added 1.8 million subscribers in 2022, a rise over 2021. This reveals that VIVHY’s recognition is rising and extends past its dwelling nation of France and that the service’s content material has discovered an viewers in different nations, which diversifies the income base. Administration can be making progress when it comes to high quality because it promotes this space. Particularly noteworthy is the multi-year strategic partnership between Canal+ and Apple. Because of this settlement, Canal+ clients in France and Switzerland will obtain a free subscription to Apple TV+. In my view, the inclusion of Apple TV+ as a part of a free bundle will positively influence Canal+’s skill to keep up and broaden its subscriber base in continental Europe. That stated, I consider there is not going to a lot influence to margins as I anticipate Apple to exert vital negotiation energy within the contract dialogue. Nonetheless, the qualitative acquire from this contract speaks nicely of Canal+ repute out there and attain (which Apple acknowledges).
Essentially, VIVHY has made vital strategic developments, significantly within the aggregation of video content material by Canal+, which strengthens its market place and enhances its choices. Nonetheless, I consider the present disconnect within the inventory worth could be attributed to the clearance of the Lagardère deal and the potential takeover by main shareholder Groupe Bolloré – which I anticipate these company actions to be upside catalyst for the inventory. As such, I reiterate my suggestion for a maintain ranking for risk-averse shareholders and recommend steadily accumulating positions throughout worth dips to reap the benefits of the pending company actions.
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