Vivendi denies report it's considering a break-up

PARIS Thu Apr 26, 2012 1:04am BST

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PARIS (Reuters) - Vivendi denied a media report on Wednesday that said it was considering a reorganization that may result in the break-up of Europe's largest telecoms and entertainment group.

"Vivendi learned with stupefaction of the claims made by Bloomberg in a story published tonight about its strategy," a Vivendi spokesman said. "Vivendi vigorously denies all the assertions in the story, which are unfounded and based on anonymous sources."

Bloomberg reported earlier on Wednesday that the Paris-based conglomerate was discussing the option of splitting into two parts. One part would include Universal Music Group and video game company Activision Blizzard, Bloomberg reported, citing people with knowledge of the matter.

The report said other options may include a partial or complete spinoff of pay-TV operator Canal Plus.

Bloomberg spokesman Ty Trippet said the company stands by its report.

Shares of Vivendi have fallen 16 percent since January because its French telecom operator SFR, the company's cash cow, has been hit hard by the arrival of a new ultra-low-cost mobile competitor, leading it to predict lower profits in the coming year.

Vivendi bought Vodafone's 44 percent stake in SFR last April for $11.31 billion - or 7.95 billion euros, based on the exchange rate at the time - effectively doubling its exposure to French telecoms.

Vivendi had hoped the deal would help it reduce the longstanding conglomerate discount of 15 percent to 20 percent that investors put on the price of its stock because of its holding company structure, in which its video game, telecoms, music, and pay TV businesses have little in common.

Vivendi's difficulties were acknowledged by Vivendi Chairman Jean-Rene Fourtou and Chief Executive Jean-Bernard Levy in their annual letter to shareholders dated March 27.

The letter opened the door to speculation in the media and among analysts that Vivendi might consider asset sales because it said such moves were "not taboo" and the board regularly reviewed the perimeter of the group.

"Should we keep the perimeter of the group as it is? Should we sell assets or separate the group in two or three? These questions are not taboo ... Your board is sensitive to these strategic questions and studies them deeply."

Vivendi's growth comes from its video game unit, Activision Blizzard, and its Brazilian fixed-line telecom unit GVT. It also owns music giant Universal Music, French pay-TV channel Canal Plus, and SFR.

"The creation of shareholder value is the basis of Vivendi's strategy. It is in this spirit that the strategic decisions for the future will be determined," the Vivendi spokesman said on Wednesday.

(Reporting By Leila Abboud in Paris and Nicola Leske in New York; Editing by Jan Paschal)

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