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TENCENT HOLDINGS LIMITED

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Artisan fund joins opposition to Universal Music spin-off

06/10/2021 | 02:06pm EDT
FILE PHOTO: Logo of Universal Music Group is seen at a building in Zurich

PARIS (Reuters) - U.S. investment fund Artisan Partners on Thursday joined another minority shareholder in French media group Vivendi in opposing its spin-off of Universal Music Group (UMG), decrying the transaction as unfavourable to some investors.

Activist fund Bluebell Capital Partners had already questioned Vivendi's plan to cash in on its prize asset - the music label behind artists such as Lady Gaga - through a distribution-in-kind to shareholders.

The deal - through which Vivendi aims to list Universal in Amsterdam and spin-off 60% to existing Vivendi shareholders - will be submitted to an investor vote on June 22.

Artisan, which declined to comment on the size of its stake in Vivendi, echoed Bluebell's argument that the distribution structure was unfavourble to minority shareholders as it was not tax efficient.

It said it also opposed Vivendi's plan to sell off chunks of UMG ahead of the listing, such as a 10% holding which William Ackman is in talks to acquire via his blank-cheque company Pershing Square Tontine Holdings.

"Selling off pieces of UMG to other investors in return for cash is a sub-optimal capital allocation decision," Artisan portfolio manager David Samra said in a statement.

"We would prefer that Vivendi spin off its entire ownership of UMG to the shareholders in a tax efficient manner."

Vivendi declined to comment.

UMG is valued at roughly 35 billion euros ($43 billion), including debt, according to Vivendi.

Vivendi, controlled by French billionaire Vincent Bollore, would still retain a slice of UMG after the spin-off. If it goes ahead, Vivendi would have 10%, Pershing Square 10%, Bollore 16% and a consortium led by Tencent 20%.

Glass Lewis and ISS, the world's two biggest proxy advisers, have recommended Vivendi shareholders vote in favour of the spin-off plans. But Glass Lewis said Bluebell's demand for a higher cash dividend to sweeten the deal for minority shareholders was "reasonable".

The two firms also recommended investors vote against a resolution giving Vivendi the possibility of buying back and cancelling up to 50% of its capital, saying it was not in shareholders' best interests.

Glass Lewis cited Bluebell's concerns that Bollore could use this tool to increase his stake in the media group without making a tender offer.

($1 = 0.8215 euros)

(Reporting by Svea Herbst and Mathieu Rosemain; Writing by Sarah White; Editing by Mark Potter)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BOLLORÉ SE -0.04% 4.604 Real-time Quote.36.19%
PERSHING SQUARE HOLDINGS, LTD. -0.55% 36.15 Real-time Quote.3.86%
PERSHING SQUARE TONTINE HOLDINGS, LTD. 0.35% 23.05 Delayed Quote.-16.85%
TENCENT HOLDINGS LIMITED 0.09% 583 End-of-day quote.3.37%
VIVENDI SE -0.71% 27.99 Real-time Quote.6.86%
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Financials
Sales 2021 591 B 91 623 M 91 623 M
Net income 2021 150 B 23 184 M 23 184 M
Net cash 2021 116 B 17 995 M 17 995 M
P/E ratio 2021 31,5x
Yield 2021 0,33%
Capitalization 4 624 B 714 B 717 B
EV / Sales 2021 7,62x
EV / Sales 2022 6,20x
Nbr of Employees 89 228
Free-Float 62,4%
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Number of Analysts 52
Last Close Price 486,02 CNY
Average target price 626,84 CNY
Spread / Average Target 29,0%
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Hua Teng Ma Executive Chairman & Chief Executive Officer
Chi Ping Lau President & Executive Director
Shek Hon Lo Chief Financial Officer & Senior Vice President
Chen Ye Xu Chief Information Officer
Yu Xin Ren COO & President-Interactive Entertainment Group
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