A takeover of the French edition worthy of Netflix

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The long saga of the French publishing house Lagardère may finally be coming to an end. A takeover by media giant Vivendi VIVHY -0.20%

would make a good end for the shareholders of the struggling company and open a new chapter for its suitor.

Vivendi, which is controlled by French billionaire Vincent Bolloré, announced Wednesday evening that it had agreed to buy back the 18% stake in Lagardère formed by activist investor Amber Capital. Subject to the approval of the antitrust authorities, Vivendi will make a takeover offer for the rest of the company. The Lagardère share listed in Paris jumped 19% Thursday.

Amber first bought shares of Lagardère in 2016 and fought a long battle to get rid of the company’s “limited partnership” structure, a French business setup that allowed CEO Arnaud Lagardère to control the business with little economic interest. The business was not well run. Since taking over his father’s business in 2003, Mr. Lagardère has achieved an annual return to shareholders of 4%, barely half of what the French CAC 40 index recorded over the period.

The family scion’s attempts to protect themselves from Amber’s attack were dramatic. He first brought in Mr. Bolloré as a white knight. Vivendi bought a stake in Lagardère last spring and helped defeat hedge fund pressure for a board overhaul at last year’s annual general meeting. But since Mr. Lagardère did not fully trust his ally, who was eyeing Lagardère’s media assets, he asked another billionaire, Bernard Arnault, founder of luxury giant LVMH and his father’s former tennis partner, to step in and buy a higher stake in the corporate structure. This initially protected Lagardère from a takeover by Mr. Bolloré, but also sent him into Amber’s arms. Their unlikely alliance ultimately led to the corporate overhaul that the CEO had tried to avoid.

Selling shares offers the activist investor a lucrative exit after a five-year campaign. Amber will receive € 24.10 per share, after building up its stake at an average price of € 15, according to people familiar with the matter. And if the buyout goes well, Lagardère shareholders can expect to be bought out by Vivendi. The outcome is less favorable for Mr. Arnault, whose maneuvers to protect Lagardère from a takeover by a rival magnate were unsuccessful.

Vivendi’s own investors also have a clearer idea of ​​what the company could look like after the release of its trophy asset, Universal Music Group, next week. The French company says it can revamp the unloved publishing assets in the same way it did for the Los Angeles-based recorded music giant. Vivendi floats the company at a valuation of 33 billion euros, or 38.83 billion dollars, after several years of strong growth.

Any parallel between Universal Music and Lagardère, owner of the publisher of books Hachette and several brands of magazines, should be taken with caution. The revival of the music business owes as much to Spotify and streaming technology as it does to Vivendi’s management. The results of the turnaround efforts of other Vivendi activities, such as pay-TV operator Canal Plus, are more mixed.

Still, the company might be able to attract a new set of value-driven investors if it can convince them it can give Lagardère’s cheap assets a makeover. As this apparent final turn of the Lagardère drama has further demonstrated, it is often useless to bet against Mr. Bolloré.

Write to Carol Ryan at [email protected]

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Appeared in the September 18, 2021 print edition under the title “Vivendi Gets Big Deal in the Books”.


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