Vivendi’s $2.5bn spend looks to secure Universal Music Group’s future

Universal Music Group may be looking at significant changes going forward, with the news that its parent company Vivendi has made a US$2.5 billion bid for a 60% stake in Parisian ad agency Havas in an effort to strengthen its position in the market.

But, while the acquisition would go a long way towards bolstering Vivendi’s marketing, design and communications efforts – and secure Universal’s future in the process – there are a few unusual wrinkles to this particular deal.

As Music Business Worldwide reports, the shares in question are currently owned by majority stakeholder Bolloré Group which, interestingly enough,  is run by Vivendi’s chairman and 20%+ shareholder Vincent Bolloré.

With 30% voting rights in Vivendi making him its most powerful voice, he is effectively steering the ship towards another of his companies. Adding to the soap opera-esque affair is the fact that Bolloré’s son Yannick is, in fact, the CEO of Havas Group.

Despite these potential issues the offer appears to be a sound one, with Vivendi offering an 8.8% premium on the shares’ closing price. As detailed by MBW, if the deal is completed as anticipated by July, Vivendi will then seek to pick up the remaining 40% from other listed shareholders.

What sort of impact would this acquisition have on Universal? A presentation to Vivendi shareholders reportedly explains the company’s three-pronged approach, adding that “The proposed acquisition will enable Vivendi to strengthen all of its businesses at a time of profound transformation.”

Vivendi’s ‘Media, Content and Entertainment’ segment (including UMG and its various IP, along with videogame behemoth Ubisoft) would remain the jewel in its crown, alongside the ‘Distribution Platforms/Telcos’ that include Dailymotion and France’s Canal+ network.

Meanwhile, Havas would form the core of a third offering incorporating ‘Communication, Data and Computer Science’, with Vivendi explaining the strategy further.

“This strategic transaction will allow Vivendi to accelerate its building of a leading world-class content, media and communications group and will ensure the newly created group a unique positioning in an environment in which content, distribution and communications are converging.”

“The proposed acquisition will enable Vivendi to strengthen all of its businesses at a time of profound transformation. In this environment which offers attractive development prospects, in-depth consumer knowledge and strong data analytics capabilities represent a significant competitive advantage.”

“This transaction will enable Havas to leverage Vivendi’s skills in talent management, content creation and distribution. In return, Vivendi will gain access to Havas’s expertise in consumer science, data analytics and new creative formats.”

On Havas’ side of the equation, MNW reports that Yanick Bolloré expressed his excitement to staff, claiming that “having privileged access to Vivendi’s prestigious assets would enable us to create unique offerings and services all over the world”.

Time will tell what’s to happen with this somewhat incestuous acquisition, but the younger Bolloré is right to express his excitement about the potential; Today, UMG announced its biggest first quarter in 15 years and sixth successive quarter of growth, with turnover of $1.4bn signalling a year-on-year increase of 14.8%, thanks to the continued rapid growth of music streaming revenue.

Facing its own messy family-related business, UMG is also hoping to extricate itself from a $31 million headache involving the late Prince’s estate.

This article originally appeared on The Industry Observer, which is now part of The Music Network.