Jocard/AFP
A well-crafted scheme. On December 9, the Vivendi group confirmed its split into three separate entities, all listed on the stock exchange since Monday. The Bolloré group, which controls 30% of the French media and publishing giant, has this time adopted a different approach from the split carried out in 2021 for Universal Music, the tax impact of which had been criticized by shareholders. The operation led by the billionaire allows him this time to save more than 500 million euros in taxes.
Since the split of Universal Music Group in February 2021, Vivendi has suffered a conglomerate discount that reached 44%. In other words, the conglomerate is valued less than the sum of its individual components. The group explained that this constituted “a handicap for us, shareholders and for the development of our activities”. Moreover, on December 16, Vivendi's stock price, valued at more than 9 billion euros, “did not reflect the true value of its assets”, declared Yannick Bolloré, son of Vincent Bolloré and chairman of the supervisory board of Vivendi.
Nearly 6 billion euros tax-free
On December 9, Vivendi formalized a breakup that was approved by 97% of shareholders at a general meeting in Paris. Three separate entities were created: Canal+, Havas and Hachette, in addition to the holding company (Vivendi SE) which continues to exist. Each of these entities has been listed since last Monday: Canal+ on the London Stock Exchange, Havas on Euronext Amsterdam and Louis Hachette Group in Paris on the regulated but unregulated Euronext Growth market. The fourth entity, namely the Vivendi holding company, will remain on the Paris Stock Exchange.
The Universal Music spin-off in 2021 drew criticism from shareholders, who deplored the tax impact of the deal. Indeed, the distribution of shares in the form of dividends subjected shareholders to taxes of 30%. This time, the Bolloré group has opted for a different approach, which should save it more than €500 million in taxes.
This is called the “partial spin-off”, a scheme that exempts Vivendi shareholders from tax on two-thirds of the value of their Canal+ and Hachette shares. Nearly 6 billion euros of holdings will be exempt from capital gains tax, being considered as “reimbursements of contributions” of assets and not as a “distribution” subject to capital gains tax.
The repayment of contribution refers to a transaction where shareholders receive shares in the new entities (such as Canal+ and Hachette) in exchange for their shares in the Vivendi conglomerate. Under this regime, the transferred shares are considered “reimbursements” and not dividend distributions. “All or part of this distribution can constitute a repayment of contribution, that is to say that the shareholders recover their initial investment and are therefore not taxable,” Charles Ménard, lawyer at EY Société d'avocats, explains to BFM TV.
As a result, at Canal+, 4.5 billion euros (out of a total of 6.85 billion euros) will be considered as a repayment of contribution to shareholders and will not be taxable. At Hachette, out of a valuation of 2.15 billion, 1.4 billion, or a little over 65%, are repayments. The split of the third entity, Havas, is indeed subject to tax, having led to the payment of dividends, just as for Universal Music, almost four years ago.
Bolloré saves around 535 million euros
This tax regime for repayments of contributions mainly benefits the majority shareholder of the giant Vivendi, namely the Bolloré group and its 30% stake. The group headed by Vincent Bolloré will also hold the same share in Canal+ and Hachette. He will then be exempt from tax on two thirds of these shares.
For its stakes in Canal+, the Bolloré group would have paid a little over 600 million euros if it had opted for a dividend distribution. However, this amount is 200 million euros. For Hachette, Vincent Bolloré saves around 135 million euros, by paying 65 million euros in taxes instead of 200 million.
In total, the Bolloré group will save around 535 million euros by opting for the “partial split” regime and not for a dividend distribution. It also benefits from the “parent-subsidiary” tax regime, a mechanism that avoids double taxation of dividends within groups of companies.
The maneuver, which comes at a time of debate over the taxation of the richest in France and inequality, raises questions about the tax optimization practices used by billionaires, who can avoid significant taxation through mechanisms such as the reimbursement of contributions.
You liked the article ? It mobilized our editorial staff, which lives only on your donations.
Information has a cost, especially since competition from subsidized editorial staff requires increased rigor and professionalism.
With your support, France-Soir will continue to offer its articles for free because we believe that everyone should have access to free and independent information to form their own opinion.
You are the sine qua non condition for our existence, support us so that France-Soir remains the French media that allows the most legitimate voices to be expressed.