Vivendi Adding To Media Empire

Vivendi is planning to make a bid for Lagardere SA if regulators approve its plan to buy out Amber Capital’s stake, a deal that would create one of Europe’s biggest media companies.

Bloomberg reports Vivendi agreed to buy 25.3 million shares of Lagardere, owner of assets including Paris Match magazine and Europe 1 radio, held by the activist investor for 24.10 euros apiece, according to a statement on Wednesday.

The new deal would push Vivendi’s holding above 30% of Lagardere, triggering a requirement to bid for the rest of the business under French law. While Vivendi anticipates that regulators would want to see some remedies from the combination of the two media companies, it plans to go ahead with the offer once it’s approved, a spokesman said in an interview. Vivendi supports Chairman Arnaud Lagardere, he said.

If the 610 million-euro ($720 million) purchase is approved, Vivendi will hold 45% of Lagardere’s share capital and 36% of the voting rights, it said in the statement.

The deal is a “good outcome” for Lagardere shareholders and represents a floor price for the stock, Tom Singlehurst, an analyst at Citigroup Inc., said in a note. But for Vivendi investors, the transaction lacks compelling strategic logic and obtaining approvals from regulators for the combination of the book-publishing businesses could be “problematic,” he said.

Vivendi’s current offer for Amber’s stake would value Lagardere at 3.4 billion euros. Lagardere had a market value of 2.75 billion euros at close of trading in Paris on Wednesday. The shares have declined 4.8% this year.

Vivendi and Amber Capital, Lagardere’s two largest shareholders, have been battling to gain more control over the French retail, media and publishing group and push through structural changes. After initially losing a court battle to force Lagardere to hold a special shareholder meeting last year, the two investors succeeded in getting their nominees on the board.