(Bloomberg) -- Shares in Canal+, the French pay-TV business being split off from Vivendi SE by billionaire Vincent Bolloré, started trading in London in the first test of a spinoff plan aimed at boosting the value of the businesses.
Canal+ is the largest of three companies being spun out of the parent business, with its shares sliding throughout the trading day to £2.3 as of 1:23 p.m. in London. Advertising company Havas shares fluctuated after opening in Amsterdam on Monday, while publisher Louis Hachette Group rose from its opening price in the debut on the Euronext Growth in Paris.
Vivendi shareholders received one share of each new stock for every share they owned in the media conglomerate. Buying one share in each of the four entities would cost about €8.5, a roughly 2.3% premium to Vivendi’s closing price on Friday, suggesting the spinoffs have enhanced value for existing shareholders. But that premium disappeared at one point, when Canal+ hit a session low shortly after 1 p.m. in London.
The listing marks the first stage of Bolloré’s plan to reduce a conglomerate discount he says has been undervaluing assets in his media empire since the most valuable, Universal Music Group, was listed in 2021.
Canal+ had said that listing in London would better reflect its international ambitions. It started as a pay-TV channel in France 40 years ago, with an emphasis on cinema and sports. While the country still makes up about 60% of the company’s revenue, Canal+ has been expanding in other markets. It invested in Swedish player Viaplay Group AB and Hong Kong-based streamer Viu and proposed to buy South Africa’s MultiChoice Group Ltd., the continent’s biggest pay-TV company.
The Canal+ listing was seen as a boost for the London Stock Exchange, which has battled years of depressed initial public offering activity. The likes of Ashtead Group Plc and Flutter Entertainment Plc have sought to move their primary listings from London to New York, where there is a deeper pool of investors.
Yannick Bolloré, Vincent’s son and the new chairman of Canal+, said last Monday at Vivendi’s investor meeting that listing day would “only be the start”, and that the company’s performance should be assessed over the next 12 to 18 months.
Analyst forecasts on Canal+’s valuation varies. UBS analysts in November saw the asset worth €3 billion ($3.1 billion). JPMorgan, however, expected the valuation to reach €6 billion over time, saying concerns over near-term cash flows were misplaced. Prior to the breakup, Vivendi had an equity value of about €8.6 billion.
Shares of Vivendi’s spinoffs may come under pressure in the first few days of trading, due to the selling from index-tracking funds. JPMorgan estimates such investors may sell about 60 million shares in both Canal+ and Havas. Like other shareholders, index funds would receive stock in the new firms after the split, but may have to sell if the spinoff company isn’t included in the gauge they track.
The breakup plan has faced challenges. Vivendi’s share price had been declining for months ahead of the split, with two activist investors questioning whether the plan would succeed in slashing the conglomerate discount. Still, the three spinoffs were approved by almost 98% of shareholders last week, after the project won backing from two proxy-advisory firms.
--With assistance from Neil Campling and Pablo Mayo Cerqueiro.
(Updates with latest trading in second and third paragraphs and chart.)
©2024 Bloomberg L.P.