Group – 6o Heenao Puja o Royo Rishio Aranganathan

A group presentation in Business Strategy II

VIVENDI REVITALIZING A FRENCH

CONGLOMERATE

Inception of Vivendi

Inception 1853 A water company -Compagnie Générale des Eaux

created by Napoleon III Initially focused on Water Sector, waste

management, 1976 –CEO Guy Dejouany 1980s - Diversification started 1996 - Jean-Marie Messier appointed as new CEO 1998 – Group changed name and become Vivendi  2000 - Creation of Vivendi Universal

Compagnie Générale des Eaux – VEVENDI - CONGLOMERATE

Series of acquisitions, in 2002 total of 14,000 companies worldwide

Formation of VIVENDI UNIVERSAL

o Media And Communicationso Music o Publishingo TV & Filmo Internet and Telecomo Environmental Services

Objectives

Revenues in Communication sector Equal the Environmental sector

To strengthen its world leadership in environmental services

To become a major Global Player in Media and communications

Financed by the VE cash flow Underline assumption that every

household will have high speed internet connection

Vivendi – Revenue by sector in 2001

VIVENDI – SECTOR WISE PROFIT IN 2001

 

Integration problem

CEO Messier compromised the interests of shareholders

Lack of synergy between Vivendi’s water and Entertainment assets – company lost 23 Billion Euros in 2002 followed 13.6 billion Euros of loss in 2001

Failed acquisition strategy (Buyouts- stock shares rather than cash- worked well when share prices were high)– bought at a higher , unrealistic price – doubts on the very way they were financed, more visible as Dot com bubble burst in 2001

Made cultural blunders, his purchase of a 17.5 million euro penthouse at Park Avenue was seen as a betrayal to France. His comment of “ the French cultural exception is dead” was taken as a hostile criticism towards French art & culture

Messier was an investment Banker before joining Vivendi, he had love for music and movies and always wanted to be in the limelight, used to make a deal of multi million Euros almost every month

His extraordinary liking towards US and US based business were not taken well in France –(a multi billion dollar acquisition of Seagram & Houghton Mifflin)

Too many in too little a time with poor decision and financial misadventure, High speed internet access didn’t come early enough, Messier lost control of reality,

Messier – a man with dual faces

In one hand Messier was taken as a modern, approachable Chief Executive who believed in Collegial - participative management style Inside the company, he appeared as authoritarian and sometimes even cutting, his removal of popular head of Canal Plus, Pierre Lescure, resulting a virtual revolt within the company by the employees His charismatic personality could sway the emotions of board members without reasoning and logic to convince them of the wisdom of his business deals

Competition by Sector

Fall of Vivendi Universal

2001- sever drop in the valuation of Telecom & Internet Industry

During this time, long awaited revision in GAAP of US and French accounting system introduce, it prohibited amortization of Goodwill and indefinite –lived other intangible assets

2002- Vivendi had to take a 17 billion Euro Goodwill impairment charge against income, caused a loss of 17billion Euro for the company

Slump in share prices create a cash crisis for Vivendi, a large portion of 17 billion euro debt was structured as Bonds in convertible and exchangeable for equity manner

Moody’s downgraded debt rating of Vivendi as analyst expected that the Vivendi had to go for multiple cash settlements

Vivendi’s Income loss

Vivendi’s stock price decline

MESSIER VS. VIVENDI

Why SEAGRAM ?

Messier wanted to make Vivendi the biggest Entertainment and Media company in the World Messier being an Investor Banker, wanted to acquire big names Always wanted to be in the limelight Wanted to venture out of Europe

BCG MATRIX

Growth Vector Analysis

Growth Vector Analysis of 2000-02

Porter Analysis 1

Porter Analysis 2

Value Chain Analysis

Financial Ratio Profile

Space Analysis

Management & Leadership

SWAT ANALYSIS 2000

VIVENDI CAPABILITY PROFILE

LIFE CYCLE

VIVENDI AS OF MARCH 2009

CONCLUSIONThere were lack of synergy in its activitiesActivities are at two different level in the life cycleManagement issues US vs. EuropeVivendi needs to concentrate either US or EuropeVivendi should monetize part of activities, may be US Entertainment assets

Thank you