Vivendi and Havas deal is sign of things to come in ad­land

Campaign UK - - NEWS - By Kate Magee and Gideon Spanier

Vivendi’s ac­qui­si­tion of Havas could kick-start “pro­gres­sive forms of cre­ative col­lab­o­ra­tion” and boost the for­tunes of the group, in­dus­try ob­servers say.

The owner of Uni­ver­sal Mu­sic Group, Canal+ and Tele­com Italia an­nounced late last week that it is in­tend­ing to buy Bol­loré Group’s 60% stake in Havas for €2.3bn.

The en­larged Vivendi/havas group, span­ning ad­ver­tis­ing, media con­tent and en­ter­tain­ment, would be worth al­most €28bn. This would make it big­ger than WPP, which is worth about €26bn.

The deal has been an­tic­i­pated for years, with Bol­loré Group, which is led by Vin­cent Bol­loré (pic­tured, left), own­ing 20% of Vivendi (of which he is also chair­man) and 60% of Havas. Spec­u­la­tion in­ten­si­fied in March when his son, Havas chief ex­ec­u­tive Yan­nick Bol­loré (pic­tured, right), merged Havas’ media and cre­ative di­vi­sions.

Sub­ject to due dili­gence, the ac­qui­si­tion is ex­pected to com­plete by the end of June or be­gin­ning of July.

Ob­servers said Vivendi may have cal­cu­lated that the reg­u­la­tory en­vi­ron­ment would be favourable in France fol­low­ing the elec­tion of Em­manuel Macron, a friend of Yan­nick Bol­loré’s, as pres­i­dent. Havas said the tim­ing is co­in­ci­den­tal.

In a state­ment, Havas said the ra­tio­nale for the merger was the com­ple­men­tary ser­vices they could share: “It would en­able

Havas to lever­age Vivendi’s skills in tal­ent man­age­ment, con­tent cre­ation and dis­tri­bu­tion. Vivendi will gain ac­cess to Havas’ ex­per­tise in con­sumer sci­ence, data an­a­lyt­ics and new cre­ative for­mats.”

Havas con­firmed that Vivendi’s pur­chase of Bol­loré Group’s stake will not af­fect when staff be­come en­ti­tled to re­ceive shares as part of their long-term bonus scheme. Havas staff are in line for up to 7.2 mil­lion shares – po­ten­tially worth €66.7m – over the next four years, ac­cord­ing to the com­pany’s an­nual re­port.

In­dus­try re­ac­tion

Most an­a­lysts and in­dus­try in­sid­ers in­ter­pret the deal as a pos­i­tive move for Havas.

Adam & EVE/DDB co-founder James Mur­phy said: “This has the po­ten­tial to

give Havas a boost – new en­ergy and a big­ger range of ser­vices to draw on.”

Sarah Golding, chief ex­ec­u­tive of CHI & Part­ners, agreed: “Apart from the cul­tural con­nec­tion, this deal makes a lot of sense. It should give them ac­cess to strong tal­ent re­la­tion­ships, as well as skilled con­tent cre­ation and dis­tri­bu­tion net­works. With branded en­ter­tain­ment be­ing a grow­ing fea­ture of the ad­ver­tis­ing land­scape, Havas should be well-placed to play in that space.”

For po­ten­tial clients, the deal could mark a change in how agen­cies are struc­tured. “The ad in­dus­try has been slow to lean into new forms of con­tent and ex­pe­ri­ences that brands can ex­ploit,” Airbnb chief mar­ket­ing officer Jonathan Milden­hall said. “I am ex­cited about this type of ac­qui­si­tion be­cause it cre­ates pro­gres­sive forms of cre­ative col­lab­o­ra­tion. Con­sumers don’t think of brand en­gage­ment in the same si­los that the in­dus­try has cre­ated. Moves like this will help all stake­hold­ers re­alise the bleed­ing-edge po­ten­tial of mar­ket­ing.”

Im­par­tial­ity is­sues

Com­men­ta­tors have said Havas needs to ad­dress how its media ser­vices can re­main im­par­tial when it ef­fec­tively has its own media plat­forms.

Yan­nick Bol­loré told Cam­paign: “There is, by na­ture, a con­flict of in­ter­ests be­tween media buy­ing and sell­ing, which is why the two ac­tiv­i­ties must be kept sep­a­rate. Ad­ver­tis­ing rep­re­sents a very small share of Vivendi’s rev­enue. It would be very fool­ish for Havas to favour Vivendi as it would raise a trust is­sue with our clients and part­ners.”

French trans­parency reg­u­la­tion “obliges com­pa­nies like us to pub­licly dis­close all our in­vest­ments and look­ing at th­ese fig­ures re­veals that there has been no favouritism over the past years”, he added.

Other media and en­ter­tain­ment com­pa­nies have moved into mar­ket­ing ser­vices. Wil­liam Mor­ris En­deavor took a 49% stake in Droga5 in 2013. More re­cently, Hearst bought icross­ing and News Corp ac­quired Un­ruly Media.

And with the joint threat to agen­cies from man­age­ment con­sul­tan­cies (Ac­cen­ture pur­chased Kar­marama last year) and big tech com­pa­nies that may lure brands’ mar­ket­ing spend di­rectly, fur­ther con­sol­i­da­tion of this type is likely.

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