Vivendi posts solid third-quarter results, rules out Ubisoft takeover for now
Reuters
Published Nov 16, 2017 19:10
Vivendi posts solid third-quarter results, rules out Ubisoft takeover for now
By Sophie Sassard and Sudip Kar-Gupta
LONDON/PARIS (Reuters) - Acquisitive French media conglomerate Vivendi (PA:VIV) reported higher third-quarter earnings and kept its 2017 outlook for an increase in sales and profit over the year.
Vivendi's third-quarter EBITA (earnings before interest, tax and amortisation) rose 5.7 percent from a year ago to 293 million euros (261.52 million pounds), while its revenue increased by 19.3 percent to 3.18 billion euros (2.84 billion pounds).
That fell short of a consensus of analysts polled by Inquiry Financial for Reuters who had expected EBITA of 324 million euros.
The group also said it would not launch a takeover bid in the next six months for French video games group Ubisoft (PA:UBIP), in which it has a 26 percent stake, according to Thomson Reuters data.
Ubsoft is up 96 percent since January and jumped to a record high after beating its second quarter sales target, prompting bankers and analysts to say the company was getting too expensive for Vivendi.
The company, whose founding Guillemot family controlling 15 percent of the business has long opposed Vivendi's stakebuilding, said in a statement it was taking note of Vivendi's comment but will remain vigilant about its long-term intentions.
Vivendi, chaired by French billionaire Vincent Bollore (PA:BOLL), has built up stakes in companies such as Telecom Italia (MI:TLIT), MediaSet (MI:MS) and Ubisoft and it bought advertiser Havas (PA:HAVA) this year.
Vivendi kept its 2017 outlook for revenue to increase more than 5 percent and for a rise of around 25 percent in its EBITA, prior to its integration of the Havas business.
The results were driven by a positive contribution of Havas, in which Vivendi acquired a 60 percent controlling stake in July and Universal Music Group's (UMG) growing revenue thanks to the success of new album releases including Taylor Swift, U2 and Sam Smith.
The prospects for troubled pay TV unit Canal+ also brightened as subscriptions started growing again in France for the first time since 2015. Vivendi said good commercial momentum in France should help the unit reach its 2017 EBITA objective of 350 million euros.
Vivendi said it expected UMG's revenue, which was up 5.3 in the third quarter compared to over 13 percent in Q2, will grow by 10 percent at the end of the year while EBITA will increase by nearly 20 percent.
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Bollore earlier said it could float the music label, which has been valued by bankers above $20 billion.
But a Vivendi insider recently told Reuters that the company saw significant growth potential in the music industry and that there was no rush to float UMG as its valuation could rise in the coming years.
CAUTIOUSLY OPTIMISTIC ON ITALY
Vivendi has been under a spotlight in Italy lately after it built up significant stakes in Telecom Italia (TIM) (MI:TLIT) and the country's biggest private broadcaster, Mediaset (MI:MS).
While Vivendi refutes controlling the Italian carrier, the country's market regulator Consob has ruled that it has de facto control of TIM, potentially opening the way to forced asset sales, which would be politically and commercially sensitive.
Acknowledging "de facto control" over Telecom Italia would compel Vivendi to consolidate its accounts, including an adjusted net financial debt of 25 billion euros ($29.6 billion).
Chief executive Arnaud de Puyfontaine said the regulatory environment was improving for Vivendi in Italy and that he was "cautiously optimistic" that the group could eventually deliver on his promises in the country.
The French group is under pressure to reach an amicable deal with Silvio Berlusconi's Mediaset before a court hearing scheduled for Dec. 19.
The two companies have been at loggerheads since July last year when Vivendi, in an unexpected U-turn, pulled out of a 800 million euro ($945 million) contract that would have given it full control of Mediaset's pay-TV arm Premium, saying the unit's business plan was unrealistic.
Written By: Reuters
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