Vivendi share price down, rebuffs UMG spin-off offer

A minor shareholder of Vivendi is pushing the French media group to spin off its Universal Music Group unit and to return a total of €9 billion in the form of a special dividend.

The U.S. hedge fund P. Schoenfeld Asset Management, which owns slightly less than 1% of Vivendi shares, has sent a letter to the French company asking for the sale of the worlds largest music group.

UMC is one of the two remaining businesses of Vivendi after the company disposed of assets, which generated around half of its revenue, in its attempt to rejuvenate growth. Most recently the company agreed to sell its Brazilian telecommunications company GVT to Spains Telefonica. The transaction is expected to close before the end of the first half of 2015.

However, Chief Executive Arnaud De Puyfontaine has repeatedly said that the music unit, which has signed with artist ranging from David Guetta to Rihanna and Rob Zombie, is not for sale.

During a conference call with journalist on March 17 Mr. De Puyfontaine even said that the business would be sold only over my dead body”. PSAM values the unit close do €9 billion and has projected that figure to increase to €12.3 billion by 2018. In 2013, Vivendi rejected a €8.5-billion offer from Japans telecommunications giant Softbank.

The hedge fund, which controls around $3.4 billion, on Monday submitted two resolutions for the meeting on April 17 asking the company to distribute €9 billion of its €15 billion cash pile via a special dividend.

PSAM said that Vivendi is significantly undervalued because of its giant cash holdings. The French media group said it will examine the proposals.

However, Vivendi outlined that its dividend policy “seems well balanced”. The company plans to return around €5.7 billion to shareholders by the middle of 2017. In the past year Vivendi distributed €1.3 billion in the form of dividends.

“The Management Board opposes the dismantling of Vivendi and reaffirms its desire to build a Paris-based, global industrial content and media group,” the company said in a statement.

Vivendi edged up 3.34% on Monday and closed at €22.90 in Paris. On Tuesday the stock was up 0.46% to €23.00 at 09:34 GMT, marking a one-year increase of 16.2%. The company is valued at €30.98 billion.

According to the Financial Times, the 21 analysts offering 12-month price targets for Vivendi have a median target of €21.50, with a high estimate of €24.70 and a low estimate of €18.00. The median estimate represents a 6.09% decrease from the last closing price.