Fitch Ratings has affirmed Vivendi SE's Long-Term Issuer Default Rating (IDR) at 'BBB' with a Negative Outlook and affirmed its senior unsecured rating at 'BBB'.
The Negative Outlook reflects our expectation that Vivendi's leverage will likely increase if the company succeeds in acquiring significant majority of Lagardere. The tender offer for Lagardere's shares is underway and the acquisition is subject to regulatory approval. We see uncertainty around the take-up rate of the tender offer as well as potential remedies that may be introduced by the antitrust authorities. Irrespective of the transaction, Vivendi will retain its significant cash position, which it may spend on other potential acquisitions or shareholder remuneration.
Vivendi's ratings have been withdrawn for commercial purposes. Fitch will no longer provide ratings or analytical coverage of Vivendi.
Key Rating Drivers
Uncertainty around Lagardere: The final terms of the Lagardere acquisition including the regulatory approval, potential remedies, and number of shares acquired add uncertainty to Vivendi's operating and financial profile. The transaction would allow Vivendi to notably strengthen its position in the publishing segment and improve the diversification of its profile following the disposal of 90% of UMG. At the same time, consolidating Lagardere could dilute the group's profitability. We believe that with significant majority control of Lagardere, Vivendi's new operating profile could be consistent with a 'BBB' rating if funds from operations (FFO) net leverage is sustained below 2.5x.
Low Visibility on Leverage: Vivendi's management has significant flexibility to manage leverage. The group should still have a large cash position whether or not the Lagardere acquisition goes ahead. We do not have visibility on how the group will use its cash pile but believe that it will likely continue to be active in M&A and maintain its shareholder-friendly remuneration policy. Sale of Vivendi's equity in its large portfolio of minority stakes could help reduce leverage if needed.
Strong Performance: Vivendi's main business segments recovered after the Covid-19 pandemic in 2021 as evident in organic revenue growth of 5.2% for Canal+, 10.8% for Havas, 18.1% for Editis and an average of 8.6% for the group. Growth continued in 1Q22 with an 7.9% year-on-year organic revenue increase.
Derivation Summary
No longer relevant as the ratings have been withdrawn.
Key Assumptions
No longer relevant as the ratings have been withdrawn.
RATING SENSITIVITIES
No longer relevant as the ratings have been withdrawn.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
Liquidity and Debt Structure
Strong Liquidity: Vivendi had a strong liquidity position with around EUR3.4 billion of cash and cash equivalents at end-2021 and EUR2.8 billion of available credit facilities. Debt maturities are evenly balanced. Liquidity is also supported by Vivendi's ability to sell part of its equity portfolio, which had a market value of EUR9 billion at end-2021.
ESG CONSIDERATIONS
Vivendi has an ESG Relevance Score of '4' for governance structure as its largest shareholder Bollore Group, controlled by Vincent Bollore, can exercise significant influence on the group, including via related-party transactions like the Havas acquisition, which adds risk to Vivendi's credit profile. The factor does not have a negative impact on the ratings at this stage but can weigh on them if governance structure weakens.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity.
Following the withdrawal of the ratings of Vivendi, Fitch will no longer be providing the associated ESG relevance scores.
For more information on our ESG Relevance Scores, visit www.fitchratings.com/esg.
Issuer Profile
Vivendi is a diversified media conglomerate with operations in various segments including pay-tv, advertising and publishing.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
RATING ACTIONS
Entity / Debt
Rating
Prior
Vivendi SE
LT IDR
BBB
Affirmed
BBB
LT IDR
WD
Withdrawn
BBB
senior unsecured
LT
BBB
Affirmed
BBB
senior unsecured
LT
WD
Withdrawn
BBB
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VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
VIVENDI SE 
