Vivendi kicks off wider revamp with Maroc sale deal

Tue Jul 23, 2013 3:59pm EDT
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By Christian Plumb and Dinesh Nair

PARIS/DUBAI (Reuters) - Vivendi SA's (VIV.PA: Quote) long-flagged deal to sell its controlling stake in Maroc Telecom to Abu Dhabi-based Etisalat is just the first step in the French conglomerate's bet that it can remake itself as a media-focused company.

Vivendi said on Tuesday it had entered into exclusive talks to sell its majority stake in Maroc Telecom (IAM.CS: Quote) to Etisalat ETEL.AD for 4.2 billion euros ($5.54 billion) in cash.

The deal, when finalized, would be the first major divestment by Vivendi as part of its year-old strategy to reduce exposure to capital-intensive telecoms to focus more on its media business.

Vivendi's shares closed up 2.4 percent, while Etisalat shares rose 1.27 percent on the Abu Dhabi bourse.

Vivendi had initially hoped to get as much as 5 billion euros for the stake, but the lower price was seen as reasonable given Maroc Telecom's lackluster performance lately and the fact that talks on the stake sale had dragged on for months.

"Despite the price disappointment (at a discount to the closing price), the deal is good news for the group, allowing it to begin its restructuring and the reduction of its debt ahead of a possible spinoff of SFR," analysts at CM-CIC said in a research note.

The deal also signals a new aggressiveness at Etisalat, which had slowed down its pace of dealmaking after an aggressive shopping spree that saw it spend about $12.6 billion on acquisitions between 2004 and 2009.

Etisalat's Chief Strategy Officer Daniel Ritz said the Maroc stake negotiations do not signal that the company was on a "buying spree".   Continued...

The logo of Vivendi is seen during the company's 2008 annual results presentation in Paris March 2, 2009.REUTERS/Charles Platiau