A MESSIER SITUATION
The media mogul's future looked shakier than ever as VU shares fell to an all-time low of $19.80, down 15% as investors balked at Messier's latest efforts to reduce the company's heavy debt load.
VU began selling part of its controlling stake in its water utility unit today, but doubts about the planned sale of an Italian pay television unit grew. The uncertainty sent the company's stock to its lowest level in more than a decade.
Vivendi's share price fell 23% in Paris to 18.75 euros. Some of the loss was recouped in a general market upswing later in New York, but the stock remains down by more than half over the last 12 months.
In addition, the head of LVMH Moet Hennessy Louis Vuitton has resigned from the VU board. The Wall Street Journal reports Bernard Arnault's resignation came ahead of a board meeting at VU scheduled for later today, at which Messier is expected to face more scrutiny over his strategy after the company's stock plummeted to 13-year lows Monday.
Arnault's resignation follows press reports suggesting that he was about to quit after serious differences with Messier over strategy to reduce the company's €33.4 billion ($32.4 billion) debt.
The Journal says investors have become increasingly concerned about the company's liquidity position following a complex series of transactions aimed at raising cash quickly. Arnault was seen as a key ally of Messier within the board.
VU accumulated debts of $32 billion over the last six years, as Messier, the chief executive, transformed a staid water company into a global media powerhouse through a series of acquisitions.
Now it is selling part of its original business and some of the later additions. The company said it expected to raise 1.7 billion euros by selling up to 15.5% of Vivendi Environnement, its majority-owned water and waste management company.
Meanwhile, investors were worried by the potential unraveling of VU’s agreement to sell Telepiu, the Italian pay TV unit, to News Corp. Two weeks ago, Vivendi reached an agreement to sell Telepiu for 1.5 billion euros to News Corp., which planned to merge it with Stream, its existing Italian pay TV unit. But News Corp. made the deal conditional on finding other investors willing to own half of the merged company, so that it can exert management control without having to consolidate the combined company's debts on its own books. So far, News Corp. has not been able to line up the necessary investors.
