After a number of failed asset sales, it finally appears that investors in French media and telecom conglomerate Vivendi (OTCPK:VIVHY) will enjoy a value unlocking catalyst. The asset in question is Vivendi's 53% stake in Maroc Telecom (OTC:MAOTF), which has operations throughout Africa.
It is reported that Vivendi is looking for at least 5.5 billion euros ($7.15 billion), equating to about a 20% purchase price premium to Maroc's public listing. The asset sale would do two things: (1) reduce Vivendi's "conglomerate discount" and (2) provide Vivendi a more flexible capital structure with the ability to pay down part of its 14 billion euro debt balance.
While Vivendi is looking for 5.5 billion euros, it appears like Vivendi may realize up to 6 billion euros, considering there are multiple bidders for Maroc Telecom. The Wall Street Journal is reporting that Emirates Telecommunications, also known as Etilsalat, and QSC Qatar Telecom are two of the bidders. Vivendi's website confirms that it received two binding offers today.
A 6 billion euro offer would represent about 27% of Vivendi's current market capitalization. I expect investors to cheer the asset sale at Vivendi's Annual Meeting on April 30, 2013 in Paris. Combined with an expected 1 euro per share cash dividend, representing about 5.8% dividend yield at current prices (subject to a 30% French dividend withholding tax, of which US investors can take a foreign tax credit), I expect the value in Vivendi shares to begin to become apparent to the investment community.
Next, I expect Vivendi to turn to strategic options for its SFR unit, including possible spin off, a potential buyout of its joint venture partner Lagardere with respect to the 20% minority stake in Canal+ France (a pay TV business) it doesn't already own, and resolution of its sale or buyout of its 62% stake in video game maker, Activision Blizzard (ATVI).
Until then, I'm hanging onto shares while these corporate actions take place in due course.
If you'd like to join the Vivendi Annual Meeting, here is the meeting information [PDF].