USA - Lagardère: The Vivendi 'Put' Makes The Investment Case Very Attractive

2024-07-29 11:45:00 ET

Summary

• Lagardère has two different but desirable main businesses where there are very few pure-play exposures globally.
• There are eight overriding reasons for Lagardère shares to be mispriced.
• We view the best approach to valuing Lagardère as a sum of the parts, with the knowledge that in a Vivendi-driven dismemberment, the book publishing business will be spun off.
• Our sum of the parts valuation for Lagardère is €32.40 per share and the 30 June share price €20.70 represents 36% discount.

The following segment was excerpted from this fund letter.

Lagardère: only a minor possibility the business is properly valued

We have held a position in Lagardère ( LGDDF ) for over eight months after the shares fell away whilst Vivendi ( VVVNF , VIVHY ) waited for approval for its takeover offer. Vivendi already owned 27.6% of Lagardère and agreed to acquire Amber Capital's 17.5% stake on 16 December 2021 and lodged takeover documentation on 21 February 2022. The takeover offer could not be finalised until Vivendi met two regulatory conditions, being to divest its Editis book publishing business and "Gala" magazine; these conditions were finally fulfilled in November 2023. As a result of the length of the offer, Vivendi closed the offer and granted accepting shareholders "transfer rights" to transfer their shares to Vivendi at the bid price of €24.10XD once the requisite conditions were met. In December 2023, it was agreed that the transfer rights would be extended to 15 June 2025, being a date by when Lagardère will announce its first full year results under Vivendi's control. There was a maximum of 28m transfer rights outstanding and we believe around 23.5 million still exist, mainly under the control of Arnaud Lagardère (the Chair) and Bernard Arnault (see below)

The present shareholder structure, with Vivendi having acquired ~63% of Lagardère, Arnaud Lagardère holding 8%, Financière Agache (Bernard Arnault) 8% and Qatar Holding 11.5%. When excluding an employee share plan, there is only a 7% free float of this €3.1 billion market capitalisation company....

For further details see: