Canal+, the French media giant, made headlines with its debut on the London Stock Exchange, marking a significant moment not just for the company but for the UK market itself. The move follows the separation of Canal+ from its parent company, Vivendi, which was approved earlier this month. This strategic split aims to address the undervaluation of individual entities, like Canal+, Havas, and the Louis Hachette Group, suffering historically from what’s known as the "conglomerate discount."
On Monday, December 11, 2023, shares of Canal+ started trading under the ticker symbol CAN. Initially, the stock was priced at 290 pence but saw immediate fluctuations, reflecting investor uncertainty and market volatility. Notably, shares plummeted by over 22%, closing at around 226 pence. Analysts had anticipated such declines due to the heavy trading strategies employed by institutional funds, which were previously limited to shares solely within the French market.
Russ Mould, investment director at AJ Bell, commented on the volatility, stating, "Volatility was expected as certain investment funds which held Vivendi may be restricted to French-listed stocks and so are forced sellers of Canal+.” This forced selling led to skepticism among investors, which is common for newly independent companies.
Maxime Saada, CEO of Canal+, explained rationale behind the spin-off. He remarked, "Vivendi was suffering from a conglomerate discount. So when you looked at the value of Vivendi, it was less than 10 billion euros. The estimate of the sum of the parts was much greater than the split.” By releasing Canal+ as its own entity, the hope is to showcase its real value, separate from the larger conglomerate.
Alongside Canal+, two other businesses, advertising giant Havas and publishing powerhouse Louis Hachette Group, also commenced trading on the European markets, with Havas listed on Euronext Amsterdam and Louis Hachette on Euronext Growth Paris. While Canal+ faced initial turmoil, both Havas and Louis Hachette saw positive trading results; Havas' shares increased by 6.6%, and Louis Hachette's surged over 23% on its debut.
The recent London listing is particularly significant as it is the largest flotation seen on the UK market since changes to listing rules were implemented earlier this year. Chancellor Rachel Reeves expressed optimism over Canal+'s choice, stating, "I’m delighted to see Canal+ is choosing the UK. Their decision is […] confidence in the UK’s capital markets." With the capital’s markets experiencing substantial losses due to other companies delisting or moving their primary listings abroad, Canal+'s entry is seen as a potential turning point.
The London Stock Exchange has struggled this year, reportedly facing its worst year since the global financial crisis. More than 88 companies have either delisted or shifted their primary listings away from London, leaving the exchange with the dire need to attract new investments and companies. The hope is, as Mould noted, "If Canal+ does well, it could act as a shop window for other big names to float in London and help replenish the pot."
Despite the rocky start, industry experts remain optimistic about Canal+'s prospects. The media company is focusing on growth beyond France, capitalizing on its established international presence. Saada pointed out, "Canal+ used to be very French-centric, with approximately 9 million subscribers. Now, two-thirds of our subscriber base is outside France.” This pivot reflects Canal+'s goal to expand its sports broadcasting portfolio and competitive positioning against other global media players.
Investors and market analysts alike will be watching closely to see how Canal+ navigates the initial stock market fluctuations and proves itself as a separate entity. The resilience of Canal+ and the strength of its connection to global media could likely position it well for future growth.
Overall, Canal+'s debut sheds light on broader market trends and the potential for reviving London’s appeal as a destination for major flotations. The ability to sustain investor confidence during this transitional phase will be key for both Canal+ and the London Stock Exchange.”
