Vivendi Offers to Acquire Groupe Bolloré's Stake in Havas for EUR2.36 billion -- 3rd Update

By Nick Kostov Features Dow Jones Newswires

Vivendi SA offered Thursday to buy a EUR2.36 billion ($2.56 billion) stake in advertising group Havas SA from the media conglomerate's own chairman, Vincent Bolloré.

Continue Reading Below

Vivendi's offer to buy the 60% stake Mr. Bolloré owns in Havas values the ad firm at EUR9.25 a share, a premium of 8.8% over Wednesday's closing price. Mr. Bolloré also controls Vivendi with a stake of more than 20%.

The power Mr. Bolloré exercises over both companies leaves little doubt the offer will be accepted. Vivendi said it aimed to reach a binding agreement with the Bolloré family holding company Groupe Bolloré "as soon as possible." Vivendi would then offer the same terms to Havas' outstanding shareholders.

Groupe Bolloré said it "welcomed the offer" and had decided to enter into discussions with Vivendi.

For years, Mr. Bolloré has used his stake at Havas to call the shots, installing his son Yannick Bolloré as the firm's chief executive.

If approved, the deal would allow Vivendi to become a vertically integrated media and advertising behemoth, capable of courting advertisers, making ads and producing the media in which to run them. It would also give Vivendi added heft and expertise in data analytics, new creative formats and consumer science.

Continue Reading Below

The deal would allow Havas to "leverage Vivendi's skills in talent management, content creation and distribution" in everything from movies and music to videogames and TV, Vivendi said.

"This acquisition is a perfect fit in an industry where content, distribution and communications are converging," Vivendi Chief Executive Arnaud de Puyfontaine said.

Vivendi officials said Havas will continue to bid against other ad companies for access to Vivendi's portfolio of content production and distribution assets, including Universal Music Group.

Still, a potential tie-up could create conflicts of interest. Advertisers have long trusted agencies to act as honest brokers in deciding where their ads appear. Havas and other agencies buy ad space and then pass the cost onto the client after taking a cut.

Rival ad groups question how Havas can continue playing the role of intermediary once its is under the control of Vivendi, which owns French broadcaster Canal Plus and a large stake of Italy's Mediaset SpA.

"It's back to the 80s," said Publicis Groupe SA Chief Executive Maurice Lévy. "I'm not sure advertisers will like that they lose neutrality in their recommendations."

In an interview last year, Yannick Bolloré described the conflict as "marginal" because Vivendi represents 0.5% of Havas's revenue and Havas's clients account for 0.9% of Vivendi's revenue.

An agreement between the firms to keep the media buying arm of Havas separate from Vivendi's media unit will remain in place, according to a Vivendi spokesman.

Vincent Bolloré, 65 years old, has made a fortune by swooping in and seizing control of businesses -- sometimes in quick takeovers and other times through slow, steady stake-building.

In 2004, Mr. Bollore bought a small stake in Havas, his first major venture in the media world. Mr. Bolloré quickly built up his stake, challenged the company's strategy and soon after became chairman.

In the past three years, the elder Mr. Bolloré has been scouring Europe for assets to marry with Vivendi's core media businesses.

Vivendi said it would pay for the deal "from available cash."

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

May 11, 2017 15:55 ET (19:55 GMT)