PARIS European media company Vivendi (VIV.PA) posted a rise in first-quarter profit and said it planned to buy the rest of pay-TV operator Canal Plus’ SECP unit for about 500 million euros ($560.90 million) as it looks to put its cash pile to work.
The group, which has 15 billion euros of cash that it wants to deploy to become a champion in European media, declined to comment on the outcome of a meeting earlier on Tuesday of its strategic committee to discuss potential acquisitions.
It affirmed its earnings outlook for the year and proposed in a statement after the market close to buy the rest of Canal+ SECP (CNLP.PA) for 7.60 euros a share via a public tender which might lead to the company delisting from the bourse. Vivendi owns 48.5 percent of SECP via Canal+ (CNLP.PA).
The price offered represented an implied premium of 20 percent over the average trading price for the last three months, it said.
“It’s in the interest of all shareholders to do this because we have cash which doesn’t make a lot of positive impact on the P&L,” Chief Executive Arnaud de Puyfontaine said on a conference call with analysts.
Vivendi, which is now focused on pay-TV and music after selling off a series of assets over the past year, said sales rose 7.5 percent to 2.49 billion euros in the quarter thanks to the strong performance of its Universal Music business which benefited from a weaker euro. Adjusted net income jumped 24 percent to 136 million euros.
It confirmed it expects increased revenue this year, helped by international growth in pay-TV and higher income from music streaming and adjusted net income to rise by about 10 percent because of lower restructuring charges and interest expenses.
“We would expect the market to be pleased by good news on Music top line although we think it is too early to tell,” Exane BNP Paribas analyst Charles Bedouelle said in a note.
Vivendi shares closed 1.4 percent down at 22.4 euros.
Bedouelle said he saw growth and value creation potential in the long run at Vivendi “but believe transition could be tougher than expected especially at Canal while lack of visibility on M&A and high operating multiple leaves the shares relatively unattractive at this level”.
Asked about the group’s intentions on Telecom Italia in which it will own a 5.7 percent stake once the sale of Brazilian unit GVT to Spain’s Telefonica closes at the end of May, de Puyfontaine said: “As we said it is opportunistic for us, our intention is not to come back to the telcos business.”
“But if we were given the opportunity to get a position with a room for maneuver that could create greater opportunities for us as regards to the development of our media and content business, we will take the opportunity,” he added.
(Editing by Susan Thomas)
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