Vivendi share price forms a rising wedge as it considers splitting

Vivendi (EPA: VIV) share price will be in the spotlight after its America’s ADR jumped by almost 10% on Wednesday. Its Euronext shares jumped to €8.95 and is hovering near its highest point since May. The stock is up by more than 12% from its lowest point this year.

Vivendi break up

Vincent Bollore, one of the richest people in France, has embarked on a long journey to simplify his vast empire and create value. In 2022, he sold his African transport and logistics business to MSC Group in a €5.7 billion deal.

The other important deal was his decision to spin off Universal Music Group through an Initial Public Offering (IPO). Since then, the stock has jumped by more than 10%, giving it a market cap of over €10 billion.

Now, Vivendi, the media company he controls, is considering splitting into three companies. The goal is to eliminate the conglomerate discount that has given it a relatively low valuation multiples.

If the transaction goes on, Vivendi will broken up into Havas, Canal+, and Lagarde. Havas is a major advertising agency that competes with the likes of Publicis and WPP. Canal+, on the other hand, is a major film and TV production company that operates a Netflix-like platform. Lagardere is a publishing company.

Vivendi’s company owns some of the best-known companies in the world. For example, it owns Gameloft, the game developer behind popular franchises like Asphalt, Modern Combat, and Dungeon Hunter. It also owns companies like DFS group, a retail travel operator, DailyMotion, and Le Monde.

Analysts believe that Vivendi’s sum of parts is bigger than the combined market cap of €10 billion. Canal+ Group’s revenue in 2022 stood at €5.87 billion while its EBITDA was €515 million.

Havas revenue was €2.7 billion and its EBITDA was €286 million while Prisma Media, Gameloft, and Vivendi village revenues rose to €320 million, €106 million, and €238 million.

Therefore, separating them could create value for shareholders. For example, Canal+ valuation alone would be over €7 billion while Canal would get a market cap of over €3.6 billion.

Most importantly, the breakup would solve the synergy issue that has affected Vivendi for a long time. These companies operate in different industries and have little synergy, which boosts their operational costs.

VIV chart by TradingView

The daily chart shows that the Vivendi stock price has been in a slow bullish trend in the past few months. The shares have jumped from the year-to-date low of €7.97 to about €9. Along the way, the 50-day and 100-day Exponential Moving Averages (EMA) have formed a bullish crossover.

Technically, the stock has also formed a rising wedge pattern. In price action analysis, this pattern is one of the most bearish signs in the market. Therefore, while the stock will likely rise on Thursday, there is a risk that it will pull back in the near term. If this happens, the key price to watch will be at €8.50, the lowest swing in March.