Wheels Turning for Vodafone Sale of SFR Stake

While we are somewhat concerned that Vivendi might overpay, we think an equitable arrangement can be reached

Allan C. Nichols, CFA 27 January, 2011 | 11:12AM
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On Wednesday, Vivendi (VIV) announced the completion of the sale of its remaining 12.34% stake in NBC Universal to General Electric (GE). With this sale and the previous disposal in December, Vivendi has received $5.8 billion in cash, excluding dividends ($390 million paid between January 2010 and January 2011). Given this cash infusion, we expect Vivendi to begin serious negotiations with Vodafone (VOD) to purchase its stake in SFR, the second-largest telecom operator in France. While we are somewhat concerned that Vivendi might overpay, we think an equitable arrangement can be reached given Vodafone's recent willingness to shed minority stakes. We think full control of SFR and its free cash flow generation capabilities will benefit Vivendi.

Read Morningstar Credit Committee's analysis of Vodafone in New Credit Rating for Vodafone.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Vodafone Group PLC72.12 GBX0.75Rating

About Author

Allan C. Nichols, CFA  is a senior stock analyst and international investing specialist with Morningstar.

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