P Schoenfeld Asset Management (PSAM) has submitted two resolutions on behalf of select clients who own 7,500,000 shares of Vivendi , to the company’s Management Board for inclusion on the agenda of the Company's Combined General Meeting to be held on 17 April, 2015.
PSAM's clients also own 3,189,281 additional shares of Vivendi. In aggregate, the shares have a market valuation of approximately EUR236,821,000 as of market-close on Friday, 20 March, 2015. PSAM has been a Vivendi shareholder since July 2012.
PSAM believes that Vivendi is significantly undervalued due to its excessive cash holdings, inadequate capital return policy and the uncertainty over Vivendi's future use of its capital. Accordingly, the PSAM Resolutions propose that Vivendi distribute an aggregate amount of EUR9 billion in an effort to close the valuation discount. Specifically, the PSAM Proposals stipulate that the payment to Vivendi shareholders would be in the form of a special dividend as follows:
1 An amount equal to EUR2,857,546,032.35 from distributable profit for the year ended 31 December 2014; and
2 An amount equal to EUR6,142,453,967.65 from share issue premium, merger premium and contribution premium.
PSAM also shared with the Management Board a white paper that contains its analysis and views of Vivendi's cash holdings, stock price discount and the benefits the PSAM Proposals present for Vivendi shareholders. The highlights of the whitepaper include:
• Vivendi is undervalued relative to its intrinsic value of approximately EUR25.00-EUR27.50 per share and should restructure its capital allocation strategy to close the discount to its sum of the parts valuation.
• Excess cash on Vivendi's balance sheet is distorting the potential returns for investors in the Company. PSAM estimates investors could realize upside up to 38% on their ownership of Vivendi based on its analysis set forth in the white paper. This gain could be further magnified for investors who choose to reinvest their distribution in Vivendi shares.
• Vivendi's share price has failed to outperform its peers over the past year despite successful disposals of SFR and GVT at higher than expected valuations and growth in the music streaming market.
• PSAM's capital allocation strategy leaves Vivendi with EUR5 billion of excess cash, which could be used to significantly expand its scope of operations.
• Strategic acquirers paying a control premium for either UMG, Canal+ or both could be a source of additional upside.
