By James Boxell in Paris
Vivendi has sold a $427m stake in Activision Blizzard, maker of the Call of Duty video game, raising questions about whether the French group has been stretched more than it has admitted by the $1.9bn purchase of EMI?s recorded music division.
The French media and telecoms group denied on Tuesday night that the surprise sale of the 3 per cent holding in one of its prized assets had been prompted by rating agency worries about the deteriorating conditions in European credit markets.
The latest Call of Duty title, Modern Warfare 3, recently became the fastest-selling entertainment product in history, with 6.5m units sold in North America and the UK in the first 24 hours after its release.
Vivendi also rejected suggestions that the sale was linked directly to the EMI deal, which was confirmed at the end of last week. It said the disposal, which cuts its holding in Activision from 63 per cent to 60 per cent, was ?tactical? and had to do with improving the French company?s ?overall capital structure?. The sale would bring its holding to the same level as at the start of this year,Vivendi added.
However, media analysts at Bernstein Research said it was ?quite natural? to connect the sale with the EMI purchase by Vivendi?s Universal Music and that the company?s desire to maintain its triple-B credit rating could have encouraged it to ?produce more hard cash?.
Claudio Aspesi at Bernstein said: ?The wisdom of selling about 3 per cent in a business that is one of the key bastions of growth for the group to aid a transformational acquisition in a challenged business, such as recorded music, seems questionable.?
Vivendi?s shares have lagged in recent years, partly because of worries about its steady stream of acquisitions and the possible impact on its cash flow and dividend.
The company has said it will sell 500m euros of non-core Universal assets to stay within its triple-B rating, but Jean-Bernard L?vy, chief executive, told the Financial Times at the weekend that the disposals could yield more than that sum.
He said Vivendi was attracted by ?the limited competition from people who would have needed a lot of bank financing?, noting that it had been able to tap long-term financing secured after it bought Vodafone?s 8bn-euro ($11bn) stake in SFR, a French telecoms company, in April.
? The Financial Times Limited 2011