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Radical hedge fund Bluebell Capital is tracking its success activity Targeting another major French company, the media group Vivendi and its powerful controlling shareholder billionaire Vincent Bolloré, established the company in Danone.
The London-based boutique fund manages only 70 million euros in assets. In May, it sent two letters to Vivendi, questioning the details. Upcoming plans By distributing 60% of its share capital to shareholders, it divested its largest asset, Universal Music Group.
Vivendi has announced the spin-off of UMG. The spin-off will be submitted to shareholders for voting on June 22. This is a way to unleash value in consideration of UMG’s soaring valuation of music companies. The rise of Stream services.
The French group, which owns 80% of UMG, valued the business at 33 billion euros.The remaining 20% is made up of Consortium Led by China Tencent Group.
In its May 21 letter, Blue Bell said that the spin-off was a good idea in principle, but the method Vivendi chose for the transaction was “sub-optimal.” This structure is called a physical dividend and will cause minority shareholders to suffer huge taxes.
In order to solve this problem, Bluebell asked Vivendi to pay shareholders an extra 2.80 euros (approximately 3.3 billion euros) per share in special cash dividends.
“We are very in favor of distinguishing UMG from other businesses. This is the right move, and investors have been promoting this move to reduce Vivendi’s holding company discount.” Bluebell co-founder Marco Taricco said in an interview.
“What we retain is the way they implement separation through dividends in kind. For all shareholders except VincentBolloré and GroupeBolloré, this is a suboptimal choice.”
Tarico declined to disclose Bluebell’s holdings in Vivendi.
Vincent Bolloré effectively controls Vivendi because his holding company owns 27% of the shares and 29.73% of the voting rights, which is just below the legal threshold for a full-scale takeover offer .
Tarico said that in the proposed UMG separation, the billionaire is “unlikely” to face tax issues similar to minority shareholders, and will continue to hold UMG’s reference shareholders and hold 19% of the new entity.
The fund also expressed concern about how Vivendi transferred UMG assets to a newly established Dutch company before obtaining shareholder approval for the spin-off. “Vivendi’s shareholders have obtained an effective solution. complete“, it wrote in the letter.
Tarico said that at this stage, Bluebell has stopped recommending that its other shareholders vote against the proposed UMG separation at the upcoming annual meeting. He said: “We provided them with a remedy to admit that they did not trade in the right way.” He was referring to the idea of a special dividend.
Vivendi declined to comment on whether the group is willing to accept such payments, but defended the transaction structure as the “best option.”
Vivendi said: “We listen to the opinions of all shareholders and will study all the different proposals.”
Universal Music Group, home of artists such as Taylor Swift and Lady Gaga, has driven much of Vivendi’s growth in recent years.
If the spin-off is completed, Vivendi’s remaining business will be much smaller and will be mainly concentrated in France. These include pay-TV operator Canal Plus; Havas News Agency; mobile game publisher Gameloft; and book publisher Editis.
In 2019, UMG accounted for 45% of Vivendi’s sales of 15.9 billion euros and 73% of its 1.5 billion euros operating profit.
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