Paris-based entertainment conglomerate Vivendi has made an offer to buy up the 60% stake in Havas owned by the Bollore Group for approximately 2.36 billion euros (about $2.56 billion).
The move is not unexpected as Bollore Group controls both entities and has pushed for greater cooperation between the two firms for some time.
Havas said the deal is contingent upon the approval of “relevant competition authorities.”
In a statement, the firm also said if the deal goes through “it would allow Havas to leverage Vivendi’s skill in talent management, content creation and distribution. In return, Vivendi will gain access to Havas’ expertise in consumer science, data analytics and new creative formats.”
Bollore Group chairman Vincent Bollore is also chairman of Vivendi, while his son Yannick is the global CEO of Havas and has a seat on the Vivendi board.
Vivendi properties include French pay-TV operator Canal+ and its production company Studiocanal, Universal Music Group, a majority stake in Telecom Italia and gaming company Gameloft, among other assets.
Bollore Group stated: "Given the financial terms, the strategic rationale and the development prospects implied by Vivendi’s indicative offer for the 20,000 employees of Havas, the Boards of Groupe Bolloré have welcomed it and have decided to enter into discussions with Vivendi."
Vivendi stated: “Through joining Vivendi, Havas will have access to financial resources for both its organic and external growth worldwide. The teams from both companies, who share the same passion for creativity and innovation, will work together to develop value-creating joint projects, while maintaining execution agility and their own identities."
In an investor note, Pivotal Research senior analyst Brian Wieser noted that if the deal is completed, one challenge facing Vivendi would be the perception of conflict of interest — if and when Havas buys Vivendi media time on behalf of clients.
Deflecting such perceptions is “not impossible, and to the extent that marketers are increasingly looking to develop more content assets of their own – already using agency groups toward these ends – Vivendi could very well end up supporting a best-in-class offering.”
Wieser posited: “The big question for the industry is: how exactly will the combination of these assets help 'Havas to leverage Vivendi's skills in talent management, content creation and distribution', and how will that impact others in the industry?”
The short answer, he said, “is they may or may not help Havas much, and probably won’t impact the core businesses of global agency holding companies by much, unless it turns out that the integration of the companies does produce significant business outperformance for Havas.”
Julie Langley, partner at Results International, said that the deal wouldn’t be the first combination of a media/content company and marketing services firm, but it would be the largest such deal. “The bigger picture, comes down to how it would put Havas in a much better position to compete. Bear in mind, Havas is only about 15% of the size of WPP and has done less than 30 deals over the past three years — none of which could be considered transformational. By comparison WPP has completed over 150,” she said.
Langley added: “Havas needs to have the appetite and ability to fund strategic acquisition in the light of ever-increased competition, not just from the likes of WPP and IPG, but also from the management consultancies and technology firms. This means you need to have very deep pockets and this deal would make absolute sense.”