Vivendi Stock Jumps Despite Denial of Break-Up Report

LONDON - Shares of entertainment and telecom conglomerate Vivendi jumped more than 5 percent in early trading Thursday after a media report suggested the firm could consider a break-up. Vivendi, whose stock has been underperforming, denied the report was accurate.

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That didn't stop the stock from trading up early in the day though. It was still up 3.2 percent at 13.76 euros as of 2:15pm London time. The stock has traded between 12.42 euros and 21.37 euros over the past year. It has languished since management earlier this year predicted lower profits until 2014 due to challenges in its telecom operations.

Citing sources, Bloomberg News reported overnight that the entertainment and media conglomerate may separate its Universal Music Group business and its stake in video game maker Activision Blizzard from its telecom and pay TV assets.

"Vivendi was astonished to read Bloomberg's allegations," the company, led by CEO Jean-Bernard Levy, said in a statement. "Vivendi vigorously denies all the allegations in this wire, which are ungrounded and, as a matter of fact, anonymous. Vivendi regrets that its formal denial was not taken into account in Bloomberg's wire."

Addressing potential future strategic considerations, Vivendi said: "Value creation for the shareholder is at the core of Vivendi's strategy. Future strategic decisions will be considered along this line."

Jefferies analyst Will Smith, who has a "hold" rating on Vivendi's stock, said the stock gain wasn't a surprise "given the 32 percent discount to the sum-of-the-parts [valuation that] Vivendi currently trades on."

UBS analyst Polo Tang also highlighted that the stock is "close to all-time lows," meaning "radical action" would be "positive" for the company and its stock.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai