PARIS (dpa-AFX) - French media and telecom firm Vivendi SA's (VIV.L, VIVEF.PK) board has unanimously decided to launch a study to split the group into two separate companies, including the spin off of French wireless carrier SFR into a separate entity.
The demerger could lead to a new international media group based in France, with strong positions in music worldwide, the Internet and associated services in Brazil, European cinema, as well as pay-television in France, Africa, Poland and Vietnam. Vivendi noted that it is aiming to develop in media on the basis of several growth activities.
Vivendi believes that SFR would gain greater freedom on strategy and developing partnerships when separated. It is expected to fully benefit from improved performance due to its wide ranging management transformation, as well as a revitalized business sector boosted by the explosion in usage of high speed fixed and mobile Internet and connectivity, it added.
The company had said late last month that its quarterly earnings from continuing operations declined, mainly reflecting poor results at SFR in a market that remains very competitive. SFR's revenues were hurt by the impact of price cuts in response to the competitive environment and those imposed by the regulators.
The final decision regarding the demerger could be taken at the beginning of next year and submitted to the 2014 shareholders' meeting.
Vivendi said the demerger is expected to create significant value to shareholders as they would have the opportunity to invest in two differentiated vehicles evaluated according to the specifics of their respective sectors.
To prepare this new organization, Jean-René Fourtou, Chairman of the Supervisory Board, proposed the appointment of Vincent Bolloré as Vice Chairman of the Supervisory Board.
The stock fell 1.1 percent on Wednesday to settle at 16.70 euros.
Copyright RTT News/dpa-AFX
© 2013 AFX News
