Bolloré – sum of parts

We believe the company’s stock is extremely undervalued trading at more than a 60% discount to our estimate of its intrinsic value.
– Evermore Global / semi-annual report / June 30, 2016,

 

Valuation / sum of parts

Bollore_Sum_of_parts_09_01_2017.PNG

I used market value for Havas & Vivendi (and of course their Portfolio)

I derived Value of Transport & Logistic from MuddyWaters & Evermore reports – and tried not to be to aggressive/positive here.

I used the latest Debt numbers I could find (maybe they financed their last buy of 5% vivendi – from 15% to 20% – partly with debt), I have not calculated cash.

I used a conglomerate discount of 20%. As I see the holding structure with Vincent Bolloré as value-creating, I put back 16% for his capital allocation skills (~Vincent Bolloré CARG).

The market capitalisation is according to consorsbank now at 10,4 bn €.

Shares outstanding:

Outstanding number of shares through the years:

2,910,452,233   //  2016 (Dec 31st, 2016)

2,895,000,442   //   2015

2,748,147,300   //   2014

2,734,196,600   //   2013

As we can see the number of shares is higher now then it was when MuddyWater released the report. Seems like Bolloré himself didn’t agree with MW – or found something even cheaper – Vivendi?

Note: The number of shares in “Financière de l’Odet” have not changed in the same period

Note2: I didn’t found buybacks through the cross holding structure

Cross Holdings aka my margin of safety

Thus, we estimate that the true number of shares outstanding is only 42.8% of what BOL reports. – MuddyWatersResearch Feb. 2015 report.

The capital structure at Bolloré is very complicated. Honestly I don’t understand it fully but the fact that MuddyWaters have not found something bad and that Vincent Bolloré is personally invested/involved gives me some safety.

Go to the organisation chart on page 6 from this link (annual report 2015 from Financière de l’Odet.)

Bollore is owned 63,8% by Financière de l’Odet – which is owned itself 53% by Sofibol and tatadata – Bollore itself ownes 35.9% of Sofibol.

Financière V ownes 51.1% of …

 

From the Financière de l’Odet 2015 annual report 2015 page 107:

Sofi bol, Financière V, Omnium Bolloré The Financière de l’Odet Group directly and indirectly owns shares in Sofi bol, Financière V and Omnium Bolloré, all intermediate holding companies controlled by the Group.
Sofi bol, controlled by Vincent Bolloré, is 51.05% owned by Financière V, 35.93% owned by Bolloré and 13.01% owned by Compagnie Saint-Gabriel, itself a 99.99% subsidiary of Bolloré.
Financière V, controlled by Vincent Bolloré, is 50.31% owned by Omnium Bolloré, 22.81% owned by Compagnie du Cambodge, 10.50% owned by Financière Moncey, 10.25% owned by Bolloré, 4% owned by Société Industrielle et Financière de l’Artois, 1.68% owned by Compagnie des Tramways de Rouen and 0.45% owned by Société des Chemins de Fer et Tramways du Var et du Gard.
Omnium Bolloré, controlled by Vincent Bolloré, is 50.04% owned by Bolloré Participations, 27.92% owned by African Investment Company (controlled by Bolloré), 17.10% owned by Financière Moncey, 4.82% owned by Bolloré and 0.11% owned by Vincent Bolloré.

I have found no big changes in holdings from 2013 to 2015 report.

 

MuddyWaters calculated that the true number of shares outstanding is only 42.8% of what BOL reports, Evermore sees 52% of Bollorés outstanding shares as treasury stock. Eliminating this structure would cost money and I am not sure if this is just theoretical or definitely value creating for minority-owners. What puzzles me the most about that is that his fact is out for so long and the Stock still has not reached the “fair value”

Maybe/probably this structure will never be fully eliminated because it is in favour of Vincent Bolloré. I will see this as a Margin of Safety. If something goes wrong the management can unlock some value here.

Here is a 1 Year old video from Carson Block (MuddyWaters) talking about Bolloré and its cross holding structure:

 

Debt / debt in the cross-holding structure:

There is a bond outstanding that yields now 1,64%. The Kupon is at 2,875% and the bond is mature in 2021. The Bond-Market sees Bolloré as not that risky.

It seems that Financiere de l’Odet fully consolidates Bollore SA (As at December 31, 2015, Financière de l’Odet directly and indirectly owned 64.4% of the share capital of Bolloré).

Financiere de l’Odet has reported debt of 4,679 while Bolloré SA itselfs reports a net debt of 4,281€. Maybe there is more debt in the cross-holding structure and it is not the holy grail MuddyWaters, Evermore and I thought it is?
On the other hand I don’t calculate its holdings in Financiere de l’Odet  as Assets so if something goes wrong at them that should not effect my sum-of-parts valuation.

 

Weak reporting & Vincent Bolloré share owner:

One argument that speaks against Bolloré SA is their weak reporting (at least in English). The annual report of Financiere de l’Odet looks a little bit better. Honestly I am still not sure how much Capital Vincent Bolloré himself has invested in this company. Forbes estimates a 5bn € Net Worth of which I guess most is in the Bolloré-SA/Vivendi/TelecomItaly/Mediaset-universe. I have not found a report about Mr. Bolloré betraying minority shareholders.

When reading the Brief History in the report of Financiere de l’Odet, or the Part about Management in the MW-report, everything they made make a lot of sense to me – like this:

sale of the Direct 8 and Direct Star channels to the Canal+ group, against a 1.7% shareholding in Vivendi’s share capital. Acquisition of additional 2.2% shareholding in Vivendi, bringing the interest to 5%.

 

 

Bottom Line:

I like the Management and the track record of the company. The price without the cross-holdings looks fair. The cross holding structure creates a Margin of Safety for me.

I want my money partly be managed by Vincent Bolloré and I think Bolloré SA the right vehicle for that. Maybe Vivendi is also a good choice, maybe I should buy some Telecom Italy? – I plan to look at them again.
What I don’t like is the complicated capital structure which I can not understand 100% and the fact that the cross-holding structure is known for a long time and the Stock still has not reached the estimated fair value.
Since Bolloré at the moment still looks appealing to me I have initiated a position for my Portfolio which I plan to expand in the future. Maybe through more Bolloré SA, maybe through  Vivendi or something else related to Vincent Bolloré.

Disclaimer

The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!

My list of sources:
Bolloré IR – Q, Annual Reports and more
Vivendi Report – Share capital number
Havas – IR page
MuddyWaters – Report Feb 2015
Blue Solutions Ir (link)
Competitor: Kühne+Nagel (Q3_2016)
Financiere de l’Odet – (link)

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One thought on “Bolloré – sum of parts

  1. Welcome on board!
    “Financiere de l’Odet has reported debt of 4,679 while Bolloré SA itselfs reports a net debt of 4,281€. Maybe there is more debt in the cross-holding structure and it is not the holy grail MuddyWaters, Evermore and I thought it is?”
    I looked at the debt of Financiere de l’Odet – for me it seems to be the same debt, that is mapped out in the reports of Bolloré. I think the difference is caused by some cash in the other holdings of Bolloré.

    Like

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