Much of Bolloré's (XPAR:BOL, Financial) value comes from its 27% ownership of Vivendi, and Vivendi's value is largely accounted for by its 90% ownership of Universal Music Group (UMG), the leading owner of music rights. Not that long ago, music looked like a dying business due to piracy concerns, but largely because of the popularity of streaming services, it has developed into one of the best positioned businesses we see today. Vivendi recently sold 10% of UMG for EUR3 billion and has committed to an IPO of the unit by 2023. Recently management said that the timeframe for an IPO could be accelerated, and given the market's robust response to new issues, we think this would be a good idea and could help close the steep discount that exists on both Vivendi's and Bolloré's shares.
Bolloré delivered good results due in part to a share price increase in its Vivendi stake. Bolloré's stock trades at a 40% discount to just the value of the Vivendi holding. In addition, it has an extremely valuable port and logistics business and a solid-state battery business which should improve significantly due to a supply agreement for Mercedes buses.
From Yacktman Focused Fund (Trades, Portfolio)'s third-quarter 2020 commentary.
