I worked on my vivendi valuation (I worked earlier on them for example here) and this is my final post on this (for the time being). Spoiler alert: I think Vivendi is fairly valued.
This is my Sum-of-Parts calculation:
Universal Music Group (UMG)
I decided to estimate the value of Universal Music Group and used for this the offer from Malones Liberty Media. When I consider that Softbank also bid about that amount for the company, I think this is not far away from reality. So this makes about roughly 8 bn € for UMG (13,5 EV/EBITA2015)
I think RTL Group and Canal+ Group are to a certain extent comparable. Both operate tv-channels and both have a content production unit (FremantleMedia for RTL Group; StudioCanal for canal+). Of course there are some differences as well. Canal+ Group is mostly pay-tv while RTL Group is not.
According to yahoo finance the Enterprise Value (EV) for RTL Group is around 12,20 bn €. But RTL Group has an EBIT of around 1bn € while Canal+ has an EBITA of 0,593bn €, roughly half of RTL. I will appreciate the value of chanal+’s EV around 5-6 bn € (12,1 EV/EBITA2015)
I looked at the numbers of Telecom Italia which is by far their biggest listed holding. Their revenue is shrinking and their earnings are irregular. I stopped looking deeper into Telecom Italia and used the market capitalisation as value for my calculation (this will do it for the time being).
Whats more interesting about them is this:
Bollore favors a sale of Tim Participacoes SA in Brazil to focus more on Italy, where Telecom Italia generates about 70 percent of sales, people familiar with the matter said last year.
Corporate cost and others
Vivendi operates a headquarter (and probably other stuff) that generates costs. This also have some (negative) value. The cost for this have been 94 mn € in 2015. If not growing, this would be 940 mn € to operate the company for 10 years, that is approximately 1 bn €.
For dailymotion I assumed the buyprice Vivendi SA have paid. For vivendi content I assumed the buyprices of Banijay Group (I have not found more about it, this will do it for the time being).
My quick and dirty estimate for Vivendi SA is 21.5 bn €. The market capitalisation according to yahoo finance is now 22.9 bn € so it’s roughly equal with my valuation. This would translate in a “hold rating” from me – so no action for my portfolio.
disclosure: no position in vivendi