French media group Vivendi is considering postponing the sale of Brazilian fixed line, DTH and broadband operator GVT if it fails to attract offers close to its €7bn valuation.
Speaking on Vivendi’s full year 2012 result conference call, CFO…
French media group Vivendi is considering postponing the sale of Brazilian fixed line, DTH and broadband operator GVT if it fails to attract offers close to its €7bn valuation.
Speaking on Vivendi’s full year 2012 result conference call, CFO Philippe Capron admitted that a sales process was ongoing, something it has not done before, but cautioned that a deal would not happen unless Vivendi got a good price.
“On GVT, we’ve not officially confirmed that there is a process, but since some of the bidders have publicly announced that they were making bids, it would be a bit foolhardy for me to deny it.
“We have an exploratory process on GVT and this is still going on. It’s not gone cold as some papers have indicated. Whether it will go through will depend on whether we feel that the value being proposed to us is representative of the quality of the asset.
“We are not in a hurry to sell any asset, least of all GVT, given the growth potential. So yes, if we receive a very good price within this process, we will definitely recommend selling to our board, who will make the ultimate decision. But if the price is not right, we won’t and we’ll wait and we’ll potentially sell something else.”
On 24 February, Brazilian newspaper Folha de S.Paulo reported that Vivendi might agree to a share swap as part of a transaction with DirecTV, the US satellite broadcaster that has previously confirmed that it is examining an offer for GVT.
However, according to the report, if it were to sell to the other bidder, a private equity consortium led by KKR, Vivendi would likely retain a stake in GVT.
Both of these measures would be designed to enable the buyers to make a lower cash bid while still coming closer to Vivendi’s valuation of the asset. The local newspaper, which cited unnamed executives involved in the negotiations, claimed that bids are due in mid-March.
Speaking to SatelliteFinance, Claudio Aspesi, senior analyst at Bernstein Research, doubted the logic in delaying a sale.
“I don’t think Vivendi will get better offers than now in six to twelve months time,” he said.
Aspesi also said the result of the Italian election yesterday hadn’t helped Vivendi’s ‘sell Maroc Telecom first, GVT later’ strategy.
“The odds for Telecom Italia coming back in for GVT have receded,” he said, citing the economic instability in Italy following the general election.
Andrea Beneventi, an equity analyst at CA Cheuvreux, said that Vivendi was keen not to sell the asset at a price the market would deem low. He said market estimates were between €6bn and €7bn in his view.
“A deal at a slightly lower price followed by a special dividend to investors [or a share] buyback could still be perceived as acceptable by the market,” Beneventi said.
Vivendi hired Rothschild and Deutsche Bank last year for the potential disposal of its Brazilian fixed-line and broadband unit as part of a strategic review.
GVT offers a hybrid of DTH and IPTV services, as well as broadband and fixed-line telephony. After growing rapidly over the past few years it now has roughly 400,000 pay-TV customers. An acquisition of GVT, which generated revenues of €1.7bn and achieved EBITDA of €740m in 2012, would enable DirecTV to offer triple play TV, broadband and fixed-line telephone services.
DirecTV and KKR declined to comment.
