Vivendi's telecoms exit plan hits a speed bump

Vivendi's plan to gradually exit the telecoms market, including a possible initial public offering of its French mobile unit SFR, hit an obstacle this week after a U.S. court temporarily halted the France-based media and telecoms group's $8.2 billion (€6 billion) deal to sell most of its stake in Activision Blizzard back to the U.S. videogame publisher.

The court ruling was made after Activision investor Douglas Hayes filed a lawsuit saying the companies were legally obliged to submit the deal to a shareholder vote, Reuters reported. Reuters added that legal experts say the Delaware Chancery court decision is unlikely to kill the transaction. However, the Wall Street Journal also noted that the ruling means the transaction could now not be completed without a vote by the California videogame maker's shareholders, and it's not clear when that vote might take place.

Nevertheless, this is an unusual move by a court, and Vivendi and Activision are expected to appeal. Reuters noted that they had aimed to finalise the transaction by the end of this month.

The Activision Blizzard MBO is regarded as pivotal to Vivendi's plan to split its media and telecoms assets, and any delay is unlikely to come as a welcome development.

"Vivendi and Activision Blizzard remain committed to a swift conclusion of the transaction and are considering all options with their lawyers in light of the court's order," the companies said in a statement.

Vivendi is also in the process of selling its 53 per cent stake in Maroc Telecom to Etisalat for €4.2 billion, and negotiations with the UAE operator are expected to be concluded in around one to two months, Reuters reported. Vivendi has previous said it aims to complete this transaction by the end of the year.

Vivendi is then expected to focus its attention on French operator SFR, which recently showed some indications that its financial situation is improving after several torrid months on the French mobile market. Vivendi has previously said it is considering several options for SFR, including splitting off the company from the rest of the group.

It has also previously been noted by Reuters that while SFR, Maroc Telecom and Brazilian broadband provider GVT may be clear targets for disposal by Vivendi if it wants to switch its focus from telecoms to media, Activision Blizzard, which operates a profitable media and content business, seems a less obvious sale and has caused some head scratching among analysts.

- For more:
- see this Reuters article
- see this WSJ article (sub. req.)
- see this CNET article
- see this separate Reuters article

Related Articles:
SFR shows some glimmers of hope as turnaround continues
Vivendi considers casting SFR adrift as part of group split
Vivendi pushes ahead with plan to offload Maroc Telecom

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