European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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<li>Spreads have generally tightened across our liquid universe, 450 bps in the case of Volkswagen.</li>
<li>Recommendations Long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, Investor AB.</li>
<li>Recommendations Long prefs / short ords: BMW, Roche, Schroders, Telecom Italia, Volkswagen.</li>
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Spreads have generally tightened across our liquid universe, 450 bps in the case of Volkswagen.
Recommendations Long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, Investor AB.
Recommendations Long prefs / short ords: BMW, Roche, Schroders, Telecom Italia, Volkswagen.


Liquid Universe of European Ordinary and Preferred Shares: January '22 Report

<ul>
<li>Spreads have generally tightened across our liquid universe, with some notorious exceptions such as BMW, Sixt and Volkswagen.</li>
<li>Recommendations <strong>Long ords / short prefs</strong>: Fuchs Petrolub, Grifols, Henkel, Handelsbanken, Investor AB.</li>
<li>Recommendations <strong>Long prefs / short ords</strong>: BMW, Roche, Schroders, Sixt, Telecom Italia, Volkswagen.</li>
</ul>


Spreads have generally tightened across our liquid universe, with some notorious exceptions such as BMW, Sixt and Volkswagen.
Recommendations Long ords / short prefs: Fuchs Petrolub, Grifols, Henkel, Handelsbanken, Investor AB.
Recommendations Long prefs / short ords: BMW, Roche, Schroders, Sixt, Telecom Italia, Volkswagen.


Liquid Universe of European Ordinary and Preferred Shares: December Report

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<li>
<strong>Spreads have generally tightened</strong> across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.</li>
<li>Recommendations<strong> long ords / short prefs</strong>: Henkel, Fuchs Petrolub, Telecom Italia, Grifols, Handelsbanken, Investor AB.</li>
<li>Recommendations<strong> long prefs / short ords</strong>: BMW, Volkswagen, Roche, Schroders.</li>
</ul>



Spreads have generally tightened across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.
Recommendations long ords / short prefs: Henkel, Fuchs Petrolub, Telecom Italia, Grifols, Handelsbanken, Investor AB.
Recommendations long prefs / short ords: BMW, Volkswagen, Roche, Schroders.


Liquid Universe of European Ordinary and Preferred Shares: November Report

<ul>
<li>KKR is looking at alternatives ranging from raising its stake in Telecom Italia’s grid operations to pursuing a full takeover of the unit, as an alternative to the merger of FiberCop (the crown jewel) with Open Fiber, by which Telecom Italia would own a minority stake in the merged entity.</li>
<li>The merger seems designed to facilitate the generation of cash (by partial disposal and/or enhancing the share price by focusing analysts’ attention on its SOTP). Ongoing restructuring has created uncertainty in Telecom Italia’s intentions and potential actions, which in turn will introduce increased volatility into the pricing of Telecom Italia equity and debt. Vivendi, sitting on a 67% paper loss, is (rightly in my view) concerned.</li>
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<p>I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and long savings/short ords.</p>
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KKR is looking at alternatives ranging from raising its stake in Telecom Italia’s grid operations to pursuing a full takeover of the unit, as an alternative to the merger of FiberCop (the crown jewel) with Open Fiber, by which Telecom Italia would own a minority stake in the merged entity.
The merger seems designed to facilitate the generation of cash (by partial disposal and/or enhancing the share price by focusing analysts’ attention on its SOTP). Ongoing restructuring has created uncertainty in Telecom Italia’s intentions and potential actions, which in turn will introduce increased volatility into the pricing of Telecom Italia equity and debt. Vivendi, sitting on a 67% paper loss, is (rightly in my view) concerned.






I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and long savings/short ords.











KKR/Telecom Italia: Open Fiber Deal, Ongoing Restructuring, Strategies

<p><a href="https://www.smartkarma.com/entities/vivendi-sa" target="_blank" data-smartkarma-citation="entities:21076:1" rel="noopener">Vivendi SA (VIV FP)</a> will increase its stake in <a href="https://www.smartkarma.com/entities/lagardere-sca" target="_blank" data-smartkarma-citation="entities:21508:1" rel="noopener">Lagardere SCA (MMB FP)</a>, which implies the mandatory launch of a takeover bid for the whole share capital of Lagardere.</p>
<p>Vivendi has agreed to purchase a 17.9% stake from of Amber Holdings in Lagardere, thus raising its stake to 44.9%. Therefore Vivendi will exceed the 30% threshold that requires launching a full takeover bid.</p>
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<p>Both the 17.9% acquisition and the subsequent takeover bid are launched at a price of <strong>€24.10/share</strong>.</p>
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<p>The premium paid amounts to 23.6% (18.4% to the 3-month VWAP).</p>
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<p>The implied equity value is €3,401.3 mn.</p>
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<p>It was <strong>foreseeable that Vivendi would bet on inorganic growth after the UMG spin-off</strong>. However, the <strong>premium paid seems at first glance high</strong> for a business with a net loss forecast (Capital IQ consensus) for 2021 of c. €(22) mn and an estimated 2022e EBITDA and EPS of €515.2 mn and €1.0, still lower than the pre-pandemic levels (€610 mn and €1.46 respectively). This is mainly due to the performance of the travel retail division (4th largest travel retailer globally), which accounted for 59% of revenues and 40% of gross operating profit in 2019. In fact, the premium implies paying a <strong>2022e P/E of c. 24.1x vs. 20.5x for Vivendi</strong> (source: Capital IQ consensus).</p>
<p>The deal will need approval from the competition authorities and will not be fully executed until the end of FY 2022. However, <strong>some significant shareholders</strong>, such as the Qatar Investment Authority, with 11.5% of the company appear to be <strong>willing to sell</strong>. <strong>At this price they will not hesitate to do so</strong>, in my view. Completion is expected by 15 December 2022.</p>
<p><strong>Gross spread</strong> is <strong>3.5%</strong>, a bit on the low side considering the 15 months to complete. <strong>Long MMB FP</strong>, <strong>TP €24.1.</strong></p>

Vivendi SA (VIV FP) will increase its stake in Lagardere SCA (MMB FP), which implies the mandatory launch of a takeover bid for the whole share capital of Lagardere.
Vivendi has agreed to purchase a 17.9% stake from of Amber Holdings in Lagardere, thus raising its stake to 44.9%. Therefore Vivendi will exceed the 30% threshold that requires launching a full takeover bid.


Both the 17.9% acquisition and the subsequent takeover bid are launched at a price of €24.10/share.


The premium paid amounts to 23.6% (18.4% to the 3-month VWAP).


The implied equity value is €3,401.3 mn.


It was foreseeable that Vivendi would bet on inorganic growth after the UMG spin-off. However, the premium paid seems at first glance high for a business with a net loss forecast (Capital IQ consensus) for 2021 of c. €(22) mn and an estimated 2022e EBITDA and EPS of €515.2 mn and €1.0, still lower than the pre-pandemic levels (€610 mn and €1.46 respectively). This is mainly due to the performance of the travel retail division (4th largest travel retailer globally), which accounted for 59% of revenues and 40% of gross operating profit in 2019. In fact, the premium implies paying a 2022e P/E of c. 24.1x vs. 20.5x for Vivendi (source: Capital IQ consensus).
The deal will need approval from the competition authorities and will not be fully executed until the end of FY 2022. However, some significant shareholders, such as the Qatar Investment Authority, with 11.5% of the company appear to be willing to sell. At this price they will not hesitate to do so, in my view. Completion is expected by 15 December 2022.
Gross spread is 3.5%, a bit on the low side considering the 15 months to complete. Long MMB FP, TP €24.1.

Vivendi/Lagardere: Mandatory Friendly Offer

France

Vivendi SE provides culture, entertainment, media, and communication services. The Company specializes in audiovisual and cinema, communications, magazines, gaming, live performance, and distribution platform activities. Vivendi serves customers worldwide.

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Vivendi SE (VIV FP)

Liquid Universe of European Ordinary and Preferred Shares: January '22 Report

This report contains a table with a selection of European companies with non-voting shares and ordinary shares. Spreads have generally...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares: December Report

Spreads have generally tightened across our liquid universe, with some notorious exceptions such as BMW, Sixt and Volkswagen. Roche seems the most...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares: November Report

Spreads have generally tightened across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.

Jesus Rodriguez Aguilar

KKR/Telecom Italia: Open Fiber Deal, Ongoing Restructuring, Strategies

I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and...

Jesus Rodriguez Aguilar

Vivendi/Lagardere: Mandatory Friendly Offer

Some significant shareholders appear willing to cash out and at this price they will not hesitate to do so. Gross spread is 3.5%, a bit low...

Jesus Rodriguez Aguilar

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