- Complexity could undermine chance of Phase I clearance
- Vivendi scoping for potential buyers - source
- Lack of identified buyer, visibility over timing cited as concern
The proposed structure of Vivendi’s [EPA:VIV] sale of Editis is viewed as too complex as a potential remedy aimed at securing European Commission (EC) clearance for its tie-up with Lagardère [EPA:MMB], a source familiar with the situation and a third-party source said.
The complexity involved could undermine the chances of EC Phase I clearance, the source familiar said.
After lengthy prenotification talks, the deal, announced in December 2021, is undergoing an EC Phase I review with a provisional deadline of 30 November.
Vivendi has yet to submit its Phase I remedy but has said the sale of its publishing unit Editis would involve distributing Editis shares to Vivendi shareholders and simultaneously listing it on the Euronext Paris stock exchange. Bolloré Group, Vivendi’s main shareholder, would sell its resulting direct stake of 29.7% in Editis to a third party. The buyer of the stake will then have the option to launch a bid for the remaining shares, the second source said.
The EC, however, has conveyed feedback that it views this potential remedy as complex, particularly for a Phase I clearance, the first source familiar with the matter said. The EC typically likes remedies to be clear cut and straightforward, particularly if they are submitted in Phase I, the source noted.
According to what is publicly reported, the package is part of an opaque set-up, the third-party source said. It does not automatically guarantee the restoration of balanced competition, this third party said. A big question mark hangs on the nature of the buyer, which is not known at this time, the third-party added.
Vivendi is pursuing a study for potential buyers for the Bolloré stake, a second source familiar said. As of today, the parties are not proposing an upfront buyer to the EC, the first source said.
Independent competition lawyers also cited the lack of a clear buyer and the timing of the Editis sale as a potential source of concern. A key question is whether the name of the buyer will have to be known to get EC clearance, a first independent lawyer noted.
It is unlikely that another player in the French publishing space could realistically take up Bollore’s stake without running into further competition issues, the first source familiar said. However, there are a large number of potential remedy takers, the source noted. A number of French businessmen would have an interest in a stake in the publishing industry, the source said.
According to a recent report on Le Figaro, Czech businessman Daniel Kretinsky – already a shareholder in several French media assets, including newspaper Le Monde, is openly interested in the stake, while a number of others in the French publishing landscape have denied an interest.
The overlap between Editis and Lagardère’s Hachette, a leading publisher in France and number three in the UK and Spain, has been cited as the key competition concern for the tie-up.
But, besides the overlap addressed by a sale of Editis, there might be some remaining overlaps in the distribution space outside of France, a lawyer following the situation indicated. In Belgium, for example, the combined parties will control between 60% and 70% of all imported French books, noted a second third-party source.
The merger risks the creation of a single very large player that could dictate the conditions of the book market in France as well as Belgium, this third party said. The EC had widely distributed questionnaires last month, querying market participants on all aspects of the book trade, such as rights sales, access to international markets and translation rights, said the third-party source.
In its questionnaires, the EC had cautioned third parties to provide their input based on the hypothesis of a full merger, as the Editis package has not yet officially been submitted, this source added.
Following a public offer by Vivendi for Lagardere that was completed in June, Vivendi holds 57.35% of Lagardère and 47.33% of its theoretical voting rights. Vivendi’s voting rights have been frozen at 22.45% pending approval of the takeover by the competition authorities.
Vivendi declined to comment. The EC does not comment on ongoing investigations.
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