Vivendi Offers US$2.6 billion to Buy 60% of Havas

What:Paris-based entertainment conglomerate Vivendi has made a US$2.6 billion offer to acquire a 60 percent stake in advertising group Havas. The combined entity would have annual revenues of 13 billion euros (approximately US$14.3 billion)  and add a new business to the Vivendi group, which owns Universal Music Group (UMG) and Canal Plus.
Why it matters: Havas is a top 6 global agency with a major media buying operation worldwide.  The transaction also reflects a trend in which media companies and agencies are integrating. It also raises certain questions on the future media neutrality of Havas as a media buying entity.

French tycoon Vincent Bollore took a first step in his attempt to merge media giant Vivendi and advertising company Havas, two groups he controls through his family-run conglomerate.

Vivendi said it was making an offer to buy Group Bollore’s 60 percent stake in advertising group Havas for 9.25 euros a share, a premium of 8.8 percent over Wednesday’s closing price, in a 2.36 billion euro (US$2.6 billion) deal.

The combined entity would have more than 13 billion euros(approximately US$14.3 billion) in annual revenues and add a new business to the Vivendi group, which owns Universal Music Group (UMG), one of the top three world record labels, and France’s number one pay-TV Canal Plus.

The offer values Havas’s total equity at 3.9 billion euros.If Bollore’s conglomerate agrees to sell its stake in the ad company, Vivendi plans to launch a simplified public tender offer on the remaining 40 percent of Havas at the same price, without seeking to delist the company, according to the statement.

Vivendi said a merger with Havas would strongly increase its group margins but did not provide details on the potential synergies between the two groups. It said it aimed to close it by the end of June, beginning of July.

Vincent Bollore, Vivendi’s chairman and controlling shareholder with a 20.65 percent stake, has pledged to turn the group into an integrated European media powerhouse and has launched a spree of acquisitions, including in Telecom Italia and Italian broadcaster Mediaset. Havas, led by Bollore’s son Yannick, was one of the two top targeted businesses in Vivendi’s next expansion phase, two sources close to the matter said last month.

Bollore Group stated: “Given the financial terms, the strategic rationale and the development prospects implied by Vivendi’s indicative offer for the 20,000 employees of Havas, the Boards of Groupe Bolloré have welcomed it and have decided to enter into discussions with Vivendi.”

Vivendi stated: “Through joining Vivendi, Havas will have access to financial resources for both its organic and external growth worldwide. The teams from both companies, who share the same passion for creativity and innovation, will work together to develop value-creating joint projects, while maintaining execution agility and their own identities.”