Vivendi Shares Rise After 3Q Revenue Beats Expectations

   By Pietro Lombardi 
 

Shares in Vivendi SA (VIV.FR) gained significantly Friday after the company reported better-than-expected third-quarter revenue on the back of a strong revenue performance at its Universal Music Group.

The media conglomerate's third-quarter revenue rose 5.5% on year to 3.38 billion euros ($3.82 billion), beating expectations of EUR3.29 billion, according to a consensus provided by FactSet.

Revenue grew 13% at the Universal Music Group unit, a performance that Deutsche Bank analysts said served as a reminder of "why it is such a valuable asset."

UBS also highlighted the performance of the unit, saying the "results confirm our positive stance on UMG with organic growth momentum positive and margin expansion underpinning our EUR22 billion UMG valuation."

With the results, the media conglomerate also gave further details on its plan to sell up to 50% of UMG, a deal it expects to be cash-only. Vivendi said it could use the proceeds from the sale to fund a "significant" share-buyback program and for acquisitions.

"About 15 banks were chosen for the bank selection process. The banks could help Vivendi identify one or more strategic partners for its subsidiary Universal Music Group," Vivendi said Thursday.

The company plans to select five to seven banks, and said that UMG's full-year results, due in February 2019, "will serve as a basis for the discussions with potential partners."

Aside from UMG, Vivendi's Havas unit also delivered a solid showing with revenue of EUR535 million. This "surprised positively," UBS said, noting that Havas's "organic growth was positive for the first time since Q317."

At 1027 GMT Vivendi shares traded 4.1% higher.

The results showed that there are some clouds hanging over French pay-TV group Canal+, Bryan Garnier said. Revenue at the business fell 0.5% on year.

Despite the uncertain outlook for Canal+, the French bank still expects Vivendi stock to react positively to the third-quarter figures, mainly due to UMG.

In the wake of the dismissal of Telecom Italia SpA's (TIT.MI) CEO, the French company confirmed its long-term commitment to the Italian group.

Vivendi is a "long-term shareholder in Telecom Italia and we are going to stay as such," Chief Executive Arnaud de Puyfontaine said in a call with analysts after the results.

Mr. de Puyfontaine, who is also on TIM's board, said the issue is "very serious" and dismissed rumors of a stake sale.

With a holding of almost 24%, Vivendi is TIM's main shareholder. It has been locked for months in a fight with Elliott Management Corp. over the company's strategy and board. The dismissal of former TIM chief executive Amos Genish earlier this week marked the latest blow in the ongoing struggle for influence at the company.

The battle over TIM is weighing on Vivendi, equity research firm CFRA said, cutting its target price on the French conglomerate's stock.

"We think our valuation is justified considering the multiple controversies the company is involved in," CFRA said.

Write to Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

November 16, 2018 05:56 ET (10:56 GMT)

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