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REV: MAY 16, 2003
CYNTHIA A. MONTGOMERY
Vivendi (A): Revitalizing a French Conglomerate
After nearly two decades under the leadership of Guy Dejouany, the November 1995 board meeting of Compagnie Générale des Eaux (CGE) marked not only the end of an era, but the transfer of control to a new captain, Jean-Marie Messier. Besides the obvious difference in age between the
76-year-old Dejouany and the 38-year-old Messier, the contrast between the two in terms of leadership style and strategic direction could not have been sharper.
In 1976 when Guy Dejouany took control, CGE was primarily a water utility company with some activities in waste treatment. As the 1980s progressed, reacting to what he saw as “unique opportunities,”1 Dejouany used the cash flow from the core utility businesses to expand into a wide range of ventures. By November 1995, revenues were eleven times the 1976 levels and the company had diversified into a wide variety of businesses including real estate, healthcare, and telecommunications. CGE was one of the largest French companies; indeed, it was in the top 100 companies in the world. (See Exhibit 1.)
By the mid-1990s, however, CGE had serious financial problems. In 1995 the company experienced a net loss of 3.6 billion French francs (Frf). The company’s real estate investments had collapsed, and debt levels ballooned. The stagnant share price caused investors to question whether the problems were a blip on the radar or reflected a more fundamental problem in the direction of the company. After two years as a partner at the investment banking firm Lazard Frères, including five months in New York, Messier understood all too well the demands of the capital markets and the push for
“shareholder value.” From the beginning it was clear that Dejouany’s handpicked dauphin aimed to take the company in a radically new direction.
I. Water Utility Business
The “heart and historical roots of CGE were in the management of the municipal water services in
France, not in telecommunications or real estate” explained an executive in CGE’s water business.2
1 Compagnie Générale des Eaux Annual Report 1989.
2 Company interviews, July 1997.
________________________________________________________________________________________________________________
Professor Cynthia A. Montgomery and John M. Turner (MBA ‘97), with the assistance of Elizabeth J. Gordon, prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 1998 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
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Vivendi (A): Revitalizing a French Conglomerate
As reflected in its name, Compagnie Générale des Eaux, which translates as General Water, CGE built a franchise based on water purification and distribution throughout France.
Historical roots From its first contract to supply water to the city of Lyon, awarded by th Imperial decree in 1853, CGE expanded rapidly throughout the 19 century into many other local municipalities in France including Nantes (1854), Paris (1860), and Nice (1864). As opposed to other countries where water utilities were strictly controlled by the central government, in France each of the 36,500 communes of the country individually controlled water supply and cost to consumers.3
Expanding its service offering to local municipalities, CGE first entered wastewater treatment in 1884 with a contract with the French city of Reims. In order to cope with growing populations and aging infrastructure, CGE launched the SADE construction subsidiary in 1918 to construct, install, and rehabilitate water systems of local municipalities. The next acquisition was the piping company
Tuyaux Bonna in 1924.
Capitalizing on the large cash flows that these near monopoly businesses generated, the company expanded rapidly in the domestic market. By 1995, 85% of French water distribution was privately controlled, of which 40% was contracted to CGE and 20% to its largest competitor, Lyonnaise des
Eaux.4
During this same period, CGE began to expand into other municipal services. By 1953, the hundredth anniversary of the firm, the company was engaged in household waste collection. In the
1960s it moved into the management of district heating networks and the operation of waste incineration and composting plants. These businesses continued to expand rapidly during the 1970s.
By 1997, waste treatment and energy represented 25% of total revenue. (See Exhibits 2 and 3.)
Although international expansion in the water treatment industry was limited until the 1970s,
CGE signed its first contract with Venice in 1880. By the 1980s more international water markets began to open up to the firm. As the executive vice president of the water division commented:
“Madame Thatcher and the World Bank were responsible for the explosion of international opportunities in the 1980s. Thatcher believed in privatization. The World Bank came to the realization that it was stupid to invest in infrastructure without investing in efficiency.”5
By the 1990s CGE was operating in many countries including China, Mexico, Argentina, Thailand,
Philippines, and the United Kingdom. By 1997, 23% of water distribution and construction related revenues originated outside France.6 International push was underway in both waste treatment and energy as well.
Economics of the business While CGE pursued a variety of different contractual relationships with local municipalities for water treatment, the vast majority in the domestic market were negotiated using affermage agreements.7 In an affermage agreement, the municipality retained ownership of assets and CGE managed and serviced the existing facilities. By contrast, in a concession agreement, assets were owned by a private company. Most affermage contracts lasted 10 to 15 years, while concession agreements were often negotiated for a 20 to 30 year period. In contrast to domestic
3“Profit Stream,” The Economist, March 29, 1997, p. 70.
4 SBC Warburg Analyst Report, May 1996, p. 33.
5 Company interviews, July 1997.
6 P. Coiffet, Paribas Analyst Report, May 1998, p. 65.
7Compagnie Générale des Eaux Annual Report 1996, p. 24.
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contracts, municipalities in the international sphere, especially in developing countries, were increasingly requiring investment in assets by service providers such as CGE.
Historically, relationships with local political leaders were at the heart of the contract negotiation process. Given the enormous stakes involved for long-term outsourcing of an entire population’s water needs, securing long-term contracts had an enormous value to companies such as CGE. Local communities historically required a close relationship with the company that secured the contract.
To fill this need, CGE’s water business was highly decentralized, with 50 subsidiaries in France alone.
Often, highly connected individuals such as former political leaders were chosen to run CGE’s subsidiaries. II. Legacy of Guy Dejouany
In 1976 when Guy Dejouany stepped to the helm of CGE, 80% of the company’s 15 billion Frf. in revenues were centered in the core businesses of water management, waste treatment and electricity.
As the 1980s progressed, Dejouany used the cash flow from the core utility businesses to expand those businesses as well as enter into a wide range of other ventures. Two decades later, after annual sales growth of 26%, the company had reached 166 billion Ffr. in revenue of which only 46% were still composed of these core activities. CGE had diversified into a wide variety of businesses including real estate, transport, healthcare, and telecommunications. Not only had the breadth and size of sales expanded, but also the number of subsidiaries in which these sales were contained had grown exponentially from 280 in 1976 to 2,714 in 1996.
Dejouany management style From the beginning, Guy Dejouany was personally involved in all the company’s operations. As CGE grew, so too did the number of individuals reporting to him.
By 1995, Dejouany’s direct reports had grown from a handful to 70. Meanwhile, corporate staff was kept at a minimum. Henri Proglio, a 25-year veteran of the company, a member of Messier’s executive committee and director of the waste and water businesses, described Dejouany’s management style: “Dejouany lived this company! He was a real operational guy that knew everything that occurred in any part of any business. Keen on details, he managed through a very personal style of trust with individual managers. Sure, it was a special sort of governance, but it worked.”8 For Dejouany, the 1980s were a period of “unprecedented opportunity” in France in which CGE could make the “great leap forward.”9 The French economy as a whole was growing rapidly and the hopes of an expanded market with the European Community were attractive opportunities for the firm. In particular, management believed that the lack of venture capital and the weak capital market in France placed the cash-generating CGE in a unique position to take advantage of the changes.
Given the highly decentralized decision-making process at the firm, subsidiary heads and division heads acquired businesses and started businesses on a massive scale.
Some insight into the managers at CGE can be gained through an understanding of their backgrounds. Most, if not all, of the senior managers were educated at one of two schools, Ecole
Nationale d’Administration or Polytechnique. Both schools encourage a “Colbertist” management style, founded on a nationalist economic doctrine run by a central power. Jean-Baptiste Colbert, the controller general of finance under King Louis XIV, concentrated his efforts on “reorganizing industry and commerce in a centralized fashion and busied himself with nearly everything, from
8 Interview, July 1997.
9 “Chairman’s Review of Operations,” Compagnie Générale des Eaux Annual Reports, 1989 and 1990..
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matters of finance, production, and trade, to military affairs, arts and education.”10 Although
“Colbertism” has evolved since the sixteenth century, centralization of the economy and state ownership of industry remained the rule in France, thus perpetuating, in the eyes of some, a “ruling class.”11 There was much crossing back and forth between the private and public sectors according to a judge who has written about this issue, with leaders of the main industrial groups having attended the same schools and served in government together.12
Reward systems at CGE, as in most of the French economy, were predominately based on salary rather than performance bonuses. Under Dejouany, bonuses for top managers were decided on the basis of his management discretion. Stock options linking company performance to pay were completely absent except for a handful of top managers and directors. During Dejouany’s tenure,
French management, not only at CGE, rejected linking salary to short-term financial indicators/ measures. Reflecting on the Dejouany’s approach to management, Guillaume Hannezo, the CFO of CGE commented: Through capturing the entrepreneurial spirit in the company, Dejouany was able to create a tremendous set of diversified companies. But, the process lacked a formal asset allocation system. Growth in the 1980s and early 1990s was spontaneous growth. This has resulted in some very good and some very bad stories for CGE.13
Diversification If Dejouany’s vision was the guiding force behind CGE’s aggressive campaign of diversification in the 1970s and 1980s, cash flow from the core utilities businesses made the diversification financially feasible.
Many of CGE’s decisions to diversify into new businesses were based on Dejouany’s personal relationships and experiences. Like many venture capitalists or entrepreneurs, the quality of the people often topped his list of considerations for entering a new business. For example, at the beginning of the 1980s, Dejouany met Christian Pellerin who convinced him of the high profit potential for real estate development, especially in new areas such as La Défense in Paris. Much the same approach was taken with CGE’s expansion into telecommunications. In 1984-1985, several highly talented engineers were hired away from France Telecom, the government owned telephone monopoly. Dejouany was immediately impressed by the entrepreneurial spirit of the newly hired engineers and was equally impressed by the potential for new competitors in the deregulated
European telecommunications market.
He granted the team a budget to launch a new telecommunications business and soon the division began to grow. Again, central to Dejouany’s approach was trust in a group of individuals and their judgment of the market.
Diversification also occurred for other reasons. For example, CGE’s construction subsidiary, purchased for the apparent synergy of a similar customer base, was bought as a “poison pill” after St.
Gobain, the French glass and materials company, attempted to take over CGE in 1981. Personal experience also played a large role in Dejouany’s decisions to enter businesses. As a result of a family member’s poor service experience in a French hospital, Dejouany saw the potential for developing a chain of hospitals in France that could deliver a higher level of service. Given that hospitals, as part
10 A.M. Doro, “Les Affaires,” Across the Board, July/August 1997, p. 44.
11 Ibid.
12 Ibid.
13 Company interviews, July 1997.
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of the state healthcare system in France, were linked to the local municipalities, Dejouany saw a great potential to leverage the company’s existing relationships.
Expansion of cross-shareholdings Another source of diversification for CGE came in the mid-80s when the company dramatically increased its portfolio investments or “crossshareholdings.” By the mid-1990s roughly 11 billion Ffr. of CGE’s assets were tied up in the shares of other publicly traded French companies such as St. Gobain, Alcatel Alsthom, Accor, Paribas, and
Société Générale. On average these assets returned only 3.4% during this period.14 At the same time, other large industrial concerns and banks such as AXA, Banque Nationale de Paris and Société
Générale became shareholders in CGE. This cross-ownership of shares is known as “noyaux durs” in
France.
The origins of these cross-shareholdings can be traced to the period 1986-1988 during a time of
“cohabitation” in French government between a socialist president, François Mitterand, and a more conservative Prime Minister, Jacques Chirac. Soon after taking power in 1981, Mitterand nationalized
15 companies. The negative results of these nationalizations and a legislative shift in power to the conservatives forced the reprivatization of the same companies in 1986. Afraid of the inability of the weak French capital markets to absorb the large quantity of newly issued shares domestically and hesitant to open ownership of France’s “crown jewels” to foreigners, the French government encouraged large, privately owned firms to soak up the new shares offered during the privatizations.
This web of cross-ownership, initially designed as a temporary measure, has evolved into a quasipermanent structure that continued to exist into the late 1990s.
The cross-shareholding often carried the added punch of enhanced voting rights for participating companies. Thus, while other large French companies held only 18.3% of CGE’s stock, they owned
24.3% of the voting rights as late as 1998.15 Such a large percentage of voting rights in a few hands had a significant impact on control at the board of directors’ level. This power was enhanced by the fact that CEOs from cross-shareholding companies often served on each others’ boards.
III. Emerging Problems for CGE in the 1990s
By 1991 cracks were starting to appear in the untarnished picture of CGE’s growth. As a result of the large capital expenditures incurred during the diversification of the 1980s, debt levels increased and return on invested capital dropped. The company’s cash position worsened. A disintegration of the real estate market in 1991, followed by a scandal in the water business threatened the economic stability of the firm.
Cash crisis In the Chairman’s Review in the 1992 Annual Report Dejouany first mentioned the difficult real estate market: “The main factors behind the crisis were…high interest rates…and an allout recession. However, the situation has been made worse…by speculative, anticipatory moves which created excess supply.”
Compagnie Immobilière Phenix (Phenix) was the main CGE company involved in real estate, a sector that CGE had seriously entered only in the late 1980s. By the end of 1995, Phenix had cost the company between 50-60 billion Ffr.16 Consequently, CGE as a whole suffered its first loss ever (see
14 Cholet-Dupont Analyst Report, March 1997, p. 10.
15 The company had an agreement with St. Gobain to unwind their cross-shareholdings by the end of first quarter 1999. This would reduce the stock held by other companies to 10% of the total, representing 15% of the voting rights.
16 Figure from Stephane Richard, President of CGIS, interview, July 1997.
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Exhibits 4–6). A cash crunch occurred as successful start-up companies, such as Société Francaise du
Radio Telephone (SFR), the telephone venture, required more cash than the water business generated. By 1995 the firm’s debt/equity ratio reached 155%, making CGE one of the most highly leveraged companies in France.
Some members of the management team believed that the disaster in real estate was clearly the exception rather than the rule at CGE. As one manager commented: “Trust was central to
Dejouany’s management style…He made one big mistake of trusting one man who was the head of real-estate… Without this gambler in real estate, the old personal model of management of Dejouany could have continued…It was a viable model.”17 Others within CGE believed that the real-estate disaster only signaled a more fundamental set of governance issues within the company.18
Shareholders punished CGE shares. From 1991 to 1995, the stock price moved sideways and significantly underperformed the CAC 40, the French equivalent of the Dow Jones Industrial
Average.
1995 corruption scandal In the spring of 1995 an alleged bribery scandal involving large payments by CGE to Socialist politicians in the French island territory, La Réunion, splashed onto the front pages of the national newspapers, Le Monde and Le Figaro. Even the 76 year old CEO Guy
Dejouany was placed under criminal investigation, although he was cleared of all charges in July of
1996.19 While this was a dramatic case, the practice of “political contributions” to local leaders during a negotiation process was not uncommon in the long history of the water business.20
In the past, the water contract negotiation process had been only loosely regulated. In the 1990s, significant legislative reforms were made to tighten up the process. In 1993, a new law required water companies and municipalities to provide greater transparency and open bidding in contract negotiation.21 By 1995, another legislative act, the Barnier Law, eliminated traditional droits d’entrée
(literally “admissions fees”) that were often requested by local municipalities when initially opening water facilities to private management.22
After assuming the chairmanship in 1996, Jean-Marie Messier made his position clear about how
CGE would conduct business with municipalities. Addressing the scandal in the monthly company newsletter, Générale Info: “There can be no hesitation in our choice between losing a contract and agreeing to illegal payments—it is far better to lose the contracts.”23
Despite the problems, by 1996 the water business generated 41 billion Ffr. in sales, making it one of France’s 30 largest firms on a standalone basis. Through its aggressive domestic and international expansion, CGE supplied roughly 65 million people with water and wastewater treatment services.
While the water business accounted for roughly one quarter of CGE’s sales, its operating income of
3.1 billion Ffr. accounted for nearly 80% of CGE’s operating profit due to the company’s massive losses in construction/property and the start-up costs in telecommunications.
17 Company interviews, July 1997.
18 Company interviews, July 1997.
19 Reuters European Business Report, July 23, 1996.
20 A. Sage, “Bribes Scandal Hits the Bourse ,” The Observer Business Page, June 19, 1994.
21 SBC Warburg Analyst Report, May 1996, p. 34.
22Ibid., p. 35.
23 “Message from Jean-Marie Messier,” Générale Info, December 20, 1996, p. 1.
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IV. Business Context of France in 1990s
After years of sustained economic growth and optimism surrounding the European Community initiative of 1992, France entered an economic slide that accelerated in the mid-1990s. In 1995, the country’s real GDP growth was 2.1%, sinking to 1.5% in 1996. Investment growth was negative and consumer spending weak.24 By 1997, unemployment in France reached a post-war record of 12.8%.
Economic growth had flattened, and economic pessimism permeated both the public and private sectors. Not only did CGE have to operate in the difficult economic environment, but, as the largest employer in France in 1995 with more than 217,000 employees, the company was under pressure to maintain employment levels. Rigid labor regulations and strong unions made the cost of employing new workers high compared to the more flexible labor markets of foreign competitors. The cost of firing new workers could be even higher. Government attempts in 1995 to liberalize the labor market led to nationwide strikes and economic gridlock.
Capital markets A lack of transparency and a weak corporate governance system made investors wary of French equities. The weakness in the French equity markets was compounded by the absence of an established domestic pension system as a source for much needed investment capital. A banker described the results of these conditions: “It was the reign of cross-shareholdings, and of the mutual protection of chief executives.”25
By 1997, foreign investors’ confidence in the opportunities in the French market had grown somewhat, raising the overall level of foreign ownership of the French equity market to 35%.26 Large institutional investors such as CALPERS and Fidelity had made a substantial portion of new foreign investment. Pressure from such outside institutional investors combined with domestic pressure had initiated a push for corporate governance reform. The most far-reaching reforms, the Vienot Code, were formulated by a group of French CEOs, chaired by the CEO of Société Générale, Marc Vienot.
The goal of these reforms has been to increase financial transparency and make French markets more shareholder friendly.
Enormous pressures were being placed on France to “conform” to market capitalism. In the past, as a country, France had placed greater importance on social stability than free market purism. With increased global interdependence and trade liberalization, there was some question as to the sustainability of a separate French approach. The Economist highlighted the dilemma:
How peculiar is France?…can France-alone among nations-run a vigorous economy and at the same time pay for grand national projects, inefficient state industries and a generous welfare state? French voters evidently believe theirs is indeed an exceptional country: last month they put in office a Socialist-Communist government whose leading lights had railed in their campaigns against the ‘socially ferocious’ Anglo-Saxon capitalism that they see prevailing elsewhere.27 As a leading French company, CGE continually faced these conflicting economic tensions.
24 “France: Economic Trends and Outlook” from TradePort Web site funded by U.S. Department of Commerce,
.
25 A. Jack, op.cit., p. 13.
26 Martin Laprad, assistant to Marc Vienot, CEO of Société Générale, in an interview on July 8, 1997.
27 “Vive la différence?” The Economist, July 26, 1997, p. 17.
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V. A New CEO: Jean-Marie Messier
In November of 1995, on the personal urging of CEO Guy Dejouany, Jean-Marie Messier was selected as the new chairman and CEO for the company. Although several directors argued that he was too young to run the company,28 Dejouany pushed the nomination of Messier, a man with limited management experience, who promised to take the company in a different direction. A senior manager who worked with them both described their contrasting styles: “Dejouany adores complexity. Messier, on the other hand, loves to make complex things simple because he’s a modern manager who is convinced that that is the best way to make himself understood.”29
Vision Central to Messier’s new operating principles was that CGE must return to its core activities. He identified these as Utilities (water, waste, energy, and transport), Communications
(telecommunications and multimedia), and Construction and Property. Looking forward, his plan was to reduce the importance of Construction and Property while building the role of
Communications. Divisional projections for the year 2000 showed almost 50% of the revenue would come from Utilities, 27% from Communications, and 25% from Construction and Property.30 (See
Exhibits 7-9.) Complete divestment from real estate had been eliminated as an option in the nearterm because Messier believed that the market would not allow a quick liquidation of these assets.
Divestment With a debt equity ratio of 155% in 1995, CGE needed to reduce its leverage.
Guided by his vision of the core businesses, Messier reduced debt by selling assets that he considered peripheral to these central activities. In 1995, 6 billion Ffr. of assets were sold. The pace of divestments rapidly accelerated in 1996 and 1997 with 13.3 billion Ffr. and more than 12 billion Ffr. respectively. While some sales involved real estate disposals to large American “vulture” funds such as the Blackstone Group, significant divestitures were made in other non-core businesses, most notably health care and catering.31 However, in 1998, CGE’s portfolio of assets still contained considerable diversity, including Parc Asterix, a French amusement park, and Sogeparc, a parking garage company.
Shareholdings of other major French companies (see “noyaux durs” above) continued to play a role at CGE. (See Exhibits 10–11.) In the first two years under Messier’s leadership, the 11.5 billion
Ffr. in peripheral assets held in other companies’ stock had been reduced.32 However, CGE’s portfolio still included shares in St. Gobain and Alcatel Alsthom, among others. At the same time,
CGE’s largest competitor, Lyonnaise des Eaux had pledged to dissolve all of its cross-shareholdings by the end of 1997.
Partnerships Messier created alliances with cash rich partners to supplement CGE’s resources in fast growth areas with high capital requirements. For example, large capital investments were required to compete in the market for cellular and fixed line telephony. Messier restructured the telecommunications operations, SFR, to create Cegetel, which, in May 1997, formed an alliance with
British Telecom and a German partner, Mannesmann. In the end, CGE kept 44% of the company’s capital, with British Telecom receiving a 26% stake for the contribution of 8.85 billion Ffr. The
28 M. Michelson, “Lazard Banker made Crown Prince at Gle. des Eaux,” Reuters European Business Report, November 23, 1994.
29 “A hand-picked heir,” Institutional Investor, International Edition, May 1996, p. 76.
30 Pierre Coiffet, Paribas Analyst Report, May 1998.
31 Blackstone Real Estate purchased Descartes Towers, a large building in La Défénse. Non real estate disposals included mobile phone, sanitation and pest control, oil and refrigeration businesses in 1996 and linen management, healthcare and cable television businesses in 1997.
32 The company planned to further reduce these holdings to 3 billion Frf. by the end of the first quarter of 1999.
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venture received capital from other partners including Southwestern Bell in both mobile and fixed telephony, and Vodafone, in the mobile telephone market alone. Also in 1997, Messier entered into a partnership with the French railroads, SNCF, to utilize their internal phone systems, “the second largest long distance telecommunications infrastructure in France (after France Telecom).”33 This deal provided the digital optical fiber network needed to provide broadband services necessary for the corporate market.
Restructuring Messier began a series of mergers to consolidate many of the 2,714 subsidiaries that composed CGE. Changes occurred first in the loss-making property division. After acquiring the highly successful management team from another real estate group, George V, CGE consolidated all seven of its property subsidiaries under the newly formed company Compagnie Générale de
Immobilier (CGIS). Secondly, in 1997 CGE reduced its stake in Société Générale d’Entreprises (SGE), its main construction subsidiary, to 51%, and in Eiffage, another construction subsidiary to 5%.
Management philosophy also changed: SGE was no longer to pursue volume, but rather profitability.
In addition, the division was rationalized and businesses in industries such as road-building and electrical contracting were reorganized into sectors within SGE. 34
In the three segments of the utilities business even more dramatic consolidations took place.
Originally, multiple subsidiaries were created to get as close as possible to the municipalities that
CGE was serving. As reforms in the contract negotiation process took place, and the firm’s marketing focus shifted to the end-consumer, management believed that the multiple subsidiary approach had become inefficient. Guillaume Hannezo, the CFO, commented:
It no longer makes sense to have four or five subsidiaries competing for the same business.
For example, in water, there are 32 water subsidiaries operating in France. Each subsidiary provides separate billing, repairs, and administrative staff. We are going to reduce the number to 10 regional branches which will have clearly defined geographic territories. Each regional branch will have roughly two million customers. This will lead to significant savings.35
Parallel consolidations were occurring in energy and waste. Already in the energy division, the two main subsidiaries, Compagnie Générale de Chauffe and Esy-Montenay had been merged.
Through the elimination of a series of overlapping operations and combined purchasing, the company planned to achieve efficiencies and raise return on investment from 5.5% to 8%. Similar efficiencies were planned for the waste division where the various subsidiaries would be concentrated in eight regional entities controlled by a newly formed subsidiary.
VI. New Structures and Systems
In addition to the financial housecleaning and internal restructuring of CGE, Messier planned other changes. He established a corporate office, developed policies for capital allocation, and addressed the issue of how to improve the management of CGE’s human resources. Messier also initiated programs to focus the company on the creation of shareholder value.
Establishing a corporate office First, Messier established a clearer reporting structure in the company. Instead of 70 direct reports, he would have only a dozen. For the first time in nearly a decade, an organizational chart was produced to clearly define the relationships between the
33 Coiffet, op. cit., p. 127.
34 Ibid, pp. 133–138.
35 Interview, July 1997.
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remaining subsidiaries. A newly formed Executive Committee, composed of key directors from the main businesses, began meeting as a team on a bi-monthly basis. Each business had its own head, team, and clearly identified objectives. As Messier described: “This has eliminated internal competition. It has also increased the transparency of performance of each business and placed the emphasis on improving productivity in everyday operations.”36
Secondly, Messier opened a new headquarters off the Champs Elysees in Paris to house the 215 members of the corporate staff. Those occupying this office included finance, legal, human resources, and investor relations. For the first time, the headquarters of the water division was not combined with corporate headquarters.
Some members of senior management felt that the new headquarters presented a radical change from the status quo. Specifically, the tasks of capital and human resource allocation were changing dramatically. As Hannezo commented:
In the past, we developed by “capilarité,”37 rather than through systematic growth. This process was perverse. You end up entering businesses that are only tangentially linked to the core, such as the spider eradication business that I recently discovered that we owned in
Australia. The new corporate office will help to discipline our free cash flow.38
CGE planned to handle asset allocation at the corporate level. Clear targets would be set by corporate for each division’s return on invested capital. Management believed that a restructured reporting organization would help to make these numbers more meaningful. Given the widely varying types of businesses and risks contained in those businesses, clearly defined costs of capital would be assigned to each. For example, the stable water utility business would not be assigned the same target as riskier telecommunications business. Under the new system, the independence of each subsidiary’s treasury would also be greatly reduced. All investments greater than 70 million Ffr. would need the approval of corporate headquarters.39
Although one of the long-term goals of the new CGE structure was to reduce the crosssubsidization of businesses, in the short term the internal transfer of cash would be needed. Messier and his corporate staff expected that the cash flow from the utilities divisions would be used to support the suffering real estate and property divisions. In response to the question of future crosssubsidization, Guillaume Hannezo replied with a smile: “We [corporate headquarters] need to be loved for ourselves and the discipline that we provide, not for the money that we have!”40
Employee mobility/firm culture Human resource allocation would be another key role of the new headquarters. Under Dejouany, employees of one business had little or no contact with employees from another business. In fact, employees from very distinct businesses such as waste and telecommunications barely considered that they worked for the same company. An extreme example of this was demonstrated during one of Messier’s first visits to Asia. According to the director of external relations: “Last year, our first company-wide meeting in Asia got started one hour late because all of the employees from the various divisions, even their directors, had to exchange
36 Jean-Marie Messier, “Chairman’s Message,” Speech to Vivendi Shareholders’ Meeting, May 15, 1998, from Vivendi Web site,
.
37 In French this refers to the formation of the capillaries in the body.
38 Interview, July 1997
39 Ibid.
40 Ibid.
10
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Vivendi (A): Revitalizing a French Conglomerate
799-019
business cards, because many had never met before. This is despite the fact that many worked in the same cities.”41
CGE’s efforts to increase employee mobility were divided into two separate programs, one for selected managers and one for all employees.
The first policy created mobility for 200 specially selected top managers. Opportunities would be provided for these managers to circulate among the various divisions during the early portions of their careers in order to create a group of better-trained general mangers for CGE. In addition, there was the hope that these managers would establish a new “CGE culture.” By June 1997 these managers had been selected and had attended two general meetings. There were 100 moves made as well. A senior human resources manager pointed out that creating mobility for managers at CGE was quite challenging:
Before, mobility was extremely rare. Mobility is still difficult to arrange for several reasons.
First, not only are the businesses of CGE very different, but the ‘business culture’ from one business to another is strikingly different. In addition, rigid social regulations (retirement/pay) make arranging transfers cumbersome.42
Another effort to create mobility was through the “Internal Job Transfer Charter” signed in
November 1996. As a result of the extremely high level of unemployment in France in the 1990s, labor unions negotiated preferential treatment for all CGE employees when a job opened in any CGE division. In addition, employees whose jobs were cut due to restructuring were given support in the form of job transfers, or early retirement.
Incentive systems Serious discussion of creating a performance-related management incentive system started in the summer of 1997. Once the new, more transparent reporting organization and new financial targets were put into place, management would need an incentive to meet the new goals. Variable financial rewards were almost completely absent under the previous system. Senior management discretion rather than any objective approach determined the incentives.
Given the different origins of many of the subsidiaries, no attempt had been made in the past to apply a uniform management performance system.
Under the new remuneration scheme, the pay of the managers of the eight major business units would be linked to their respective return on investment targets. The job of pushing variable pay further down into the various organizational units would be left to the individual business heads. In
1997 the company also introduced a one-time stock option plan for the company’s top 25 managers.
Further, CGE’s ongoing stock option program, which granted options which would vest in five years’ time, increased from 200 participants in 1995 to 600 participants by 1998.
Few companies in France have been able to implement variable pay systems similar to those used by their competitors in Britain and the United States. From a social point of view, incentives based on profitability were particularly difficult to institute if cost reductions required layoffs. Gaz de France was one company that had established an innovative incentive system. Its managers accepted a 10% drop in base pay in order to have the opportunity to receive a performance bonus as high as 30%.
Some industry observers thought variable compensation plans could meet strong resistance in
France, particularly in slow growth or labor intensive companies. Not only would layoffs be expensive and difficult under French law, but also work force reduction could lead to labor unrest.
41 Interview, July 1997.
42 Company interviews, July 1997.
11
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799-019
Vivendi (A): Revitalizing a French Conglomerate
Creating shareholder value Although Messier had been CEO of the company for only two years by the end of 1997, financial analysts and shareholders had rewarded his performance and, through purchase of the company’s shares, expressed confidence in the new directions that CGE had taken. Since January of 1996 when Messier assumed the leadership of the company, the stock had appreciated 71.8%.43 Over this period, the stock outperformed the main French stock market index, the CAC40 (see Exhibit 12.)
Efforts were begun to spread the message of shareholder value to the employees. For example, the concept of shareholder value was explained to the select group of 200 managers, mentioned above, during one of their meetings during 1997. The managers were expected to return to their divisions and hold similar meetings to present the concept to subordinates. Given the long history not only at CGE but also in all of France of balancing the needs of all “stakeholders,” especially employees, Messier’s message has received varying degrees of understanding and acceptance inside
CGE. A senior manager who attended the meeting expressed the following sentiments: “The idea of shareholder value is quite new…I don’t think that it is very well understood, even by the basic people. Last week we had the annual meeting for the top managers…people found the shareholder value concept too complicated…the calculations appeared a bit mysterious.”44
In 1996 an employee shareholding scheme was introduced. A year later, 21,000 people were participating in the plan. The total amount invested was 528 million Ffr. CGE introduced a number of measures to encourage employees’ participation, including additional payments contributed by the company. As of 1998, 2.5% of the company’s shares were owned by employees.
Strategic direction In his speech to the 1998 annual meeting, Messier elaborated his view of the company’s strategic direction. The utilities business, while maintaining its strong domestic position, would be focused on international expansion and the development of multi-service contracts. Construction and property, while not expected to have a decisive financial effect, would once again be focused on becoming attractive to investors. In the communications businesses,
Messier would look to build a strong domestic base, becoming a force second only to the national phone company, and a major player internationally as well. In the chairman’s message that year
Messier said: “Cegetel plus Havas plus our special partnership with Canal Plus—by networking these varied talents [the company] intends to play a major part in the communications industry.”45
Cegetel, one of the core components of this business, was projected to provide net sales of 20 billion Ffr. in 1998. In early 1998, in partnership with Bertelsmann, the German publisher, Cegetel took a 55% stake in AOL France. In an interview with CommunicationsWeek International, Messier commented: “The Internet is at the heart of Cegetel’s strategy…it represents a new market where companies like CGE have great opportunities.”46
Later that year, CGE proposed a merger with Havas, France’s largest media group, in which CGE already held a third of the shares. A publisher strong in business and education markets, Havas also increased CGE’s interest in Canal+, the largest pay television service in Europe. When the merger was first proposed, a suit was filed by a minority shareholder group contending that shareholders in the target company were not being well treated. The shareholder group lost the court fight, but CGE
43 Data from Bloomberg Financial Analysis, December 31, 1995 to December 31, 1997.
44 Company interviews, July 1997.
45 Jean-Marie Messier, “Chairman’s message,” op. cit.
46 K. Cukier, “A break with tradition: The Net’s new visionaries rethink the role of the telco,” Communications Week
International, p. 14.
12
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Vivendi (A): Revitalizing a French Conglomerate
799-019
in time added a cash premium of 8.7 billion Ffr., equal to 107 Ffr. per share, or 14.5% of the original offer. 47
It was expected that the new division of the communications unit would provide proprietary content for the Internet partnership with AOL and Cegetel. In addition, many analysts believed that
Messier and Eric Licoys, his former Lazard colleague and the newly appointed head of Havas, could add substantial value to the business through financial and operational restructuring. Additional agreements with Bertelsmann were also expected.
VII. Vivendi
The May 1998 annual shareholders meeting came two and a half years after Jean-Marie Messier assumed the chairmanship of CGE. During the meeting, Messier reviewed his vision for the company, and the reduction of debt and return to profitability that had occurred under his leadership. Looking forward, Messier asked the shareholders to approve CGE’s merger with Havas and the renaming of the resulting company as Vivendi. In doing so, he explained that the merger represented the company’s commitment to building a stronger presence in communications, expanding beyond the traditional base of water, utilities, and property management. Going forward, the water sector alone would have the exclusive use of the name Générale des Eaux.
In the annual report for 1997, Messier commented on the new name for the enterprise:
A new name holds a great deal of symbolic force. Vivendi, the name we have chosen, is warm and vivacious. It evokes the characteristics shared by all our businesses—life itself, the quality of life, and movement. Vivendi is easy to pronounce and remember in all languages. It underpins our ambition as an international company and will unite under one banner the individual names of our different businesses worldwide.48
The name change was not just cosmetic. In 1997, Messier, with the board’s approval, made the first change ever in the firm’s articles of incorporation by adding communications as a line of business. 47 J. Tagliabue, “Compliments of U.S. Investors; New Activism Shakes Europe’s Markets,” The New York Times, April 25, 1998,
Section D, p. 1.
48 Compagnie Générale des Eaux Annual Report 1997, p. 3.
13
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799-019
Exhibit 1
-14-
Top 20 Largest French Companies
France
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
10
28
39
44
45
47
48
56
58
59
60
64
69
89
109
110
126
134
136
138
Company/ business
Revenue
($ mil)
Net
Income
($ mil)
Assets
($ mil)
Market
Value
($ mil)
AXA-UAP/insurance
Elf Aquitaine Group/energy
Renault Group/automobiles
Total Group/energy
Suez Lyonnaise Group/service
Peugeot Groupe/automobiles
Alcatel Alsthom/elec. & electron
Carrefour Group/retailing
GAN-Assur Nationales/insurance
Société Générale Group/banking
Vivendi/services
France Telecom/telecomm
BNP Group/banking
Crédit Lyonnais Group/banking
Promodès Group/retailing
Saint-Gobain/bldg. materials
Groupe Paribas/banking
Bouygues Group/constuction
Rhône-Poulenc Group/chemicals
Pinault-Printemps-Redoute/retailing
76,869
43,570
35,621
32,738
32,625
32,002
31,845
29,001
28,935
28,723
28,632
26,853
26,118
22,409
18,960
18,346
16,124
15,603
15,412
15,279
1,357
960
930
1,304
688
-474
799
614
49
1,047
924
2,546
1,021
181
277
964
892
129
-855
489
403,132
42,252
38,936
25,335
79,031
31,623
42,045
14,518
152,281
411,055
43,122
50,545
339,819
250,279
8,355
22,668
245,188
13,621
27,529
11,302
37,727
38,172
12,527
29,904
31,512
9,778
34,865
23,477
4,386
19,519
27,148
55,929
18,188
5,120
9,310
17,577
15,725
4,633
20,091
19,305
World
Rank
Stock
Price
($)
113.66
138.70
52.24
124.01
170.41
195.11
213.64
610.20
29.49
197.78
200.62
55.93
85.29
98.14
486.36
196.95
103.65
180.59
55.41
822.00
_____EPS______
1997
1998E
($)
($)
4.17
3.74
3.91
5.31
5.53
-9.42
5.09
15.96
0.33
10.86
7.16
2.55
4.84
3.47
14.49
11.13
10.18
5.25
-2.55
21.79
4.54
5.72
3.61
5.20
6.29
9.30
7.14
17.97
1.67
12.04
7.31
2.52
5.19
5.97
16.61
9.69
7.29
3.86
1.88
23.59
Yield
(%)
2.0
2.7
1.7
2.6
2.2
0.4
1.3
1.2
0.0
2.7
1.9
2.9
2.1
0.0
0.9
2.4
3.4
2.4
1.7
1.2
Employees
(thousands)
80.6
84.6
141.3
54.4
175.0
140.2
189.5
113.3
33.6
55.5
193.3
156.6
52.7
50.8
50.8
106.8
20.0
77.1
68.4
59.5
Source: Forbes, July 28, 1997, p. 188.
Note:
All figures except per-share items are in millions of dollars. Revenue, Net Income, and 1997 EPS are converted at an average rate for the fiscal year; assets are converted at fiscal year-end rate.
Revenue figures are for groups or consolidated operations and exclude excise taxes and duties. For companies with January, February or March fiscal year-ends, 1997 figures are used unless otherwise noted. Market value is as of May 29, 1998.
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Vivendi (A): Revitalizing a French Conglomerate
Exhibit 2
799-019
CGE 1997 Organization Chart
Générale des Eaux Group
UTILITIES
Water
Energy
CONSTRUCTION
& PROPERTY
Construction
SGE (51%)
COMMUNICATIONS
Telecommunications:
Cegetel (44%)
Property: CGIS
Havas
Energy Services
Sithe Energies (60%)
UGC (38.8%)
Waste management:
CGEA
Transport: CGEA
Source: CGE 1997 Annual Report.
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799-019
Exhibit 3
Vivendi (A): Revitalizing a French Conglomerate
Breakdown of 1997 Turnover by Division
Source: Paribas Analyst’s Report, May 1998.
Exhibit 4
Vivendi Consolidated Statement of Income 1995-1997 (in FFm)
1997
Net sales
Other revenue
Purchases
Wages and social security costs
Taxes other than income taxes
Other operating expenses
Depreciation
1996
1995
167,115.6
6,262.0
(97,153.3)
(44,346.1)
(3,120.4)
(15,967.8)
(8,619.1)
165,913.8
5,274.8
(92,549.0)
(47,493.9)
(3,261.6)
(16,097.3)
(7,941.6)
162,961.1
4,310.9
(91,713.0)
(46,491.6)
(3,092.6)
(15,412.4)
(8,861.9)
Operating income
Financial expense
Financial provisions
4,170.9
(1,184.4)
(792.3)
3,845.2
(2,087.2)
(65.9)
1,700.5
(2,724.8)
(673.7)
Net financial expense
Operating income less net financial expense
Exceptional items
Depreciation
Amortization of goodwill
(1,976.7)
2,194.2
11,660.1
(5,896.5)
(2,458.0)
(2,153.1)
1,692.1
2,629.5
(1,712.5)
(962.8)
(3,398.5)
(1,698.0)
843.6
(2,211.0)
(1,020.8)
Net exceptional expense
Employee profit-sharing
Income taxes
3,305.6
(264.5)
(1,277.0)
(45.8)
(260.8)
(1,189.8)
(2,388.2)
(310.9)
(1,437.8)
3,958.3
679.3
754.9
5,392.5
195.7
1,387.2
369.8
1,952.7
(5,834.9)
876.1
1,272.5
(3,686.3)
Net income/expense) before equity interest and minority interest
Equity in net earnings of affiliated companies
Minority interest
Net income/(expense)
Source: CGE 1997 Annual Report.
16
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Vivendi (A): Revitalizing a French Conglomerate
Exhibit 5
799-019
Vivendi Consolidated Balance Sheet 1995-1997 (in Ffm)
1997
ASSETS
Intangible assets other than goodwill
Goodwill
Owned property, plant and equipment
Publicly-owned utility networks financed and managed by the group
Accumulated depreciation
Tangible assets
Investments accounted for by the equity method
Unconsolidated investments
Portfolio investments held as fixed assets
Other investments held as fixed assets and other financial assets
Financial assets
Total fixed assets
Inventories
Accounts receivable
Short-term financial receivables
Cash and marketable securities
Total current assets
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Capital stock
Additional paid-in capital
Retained earnings
Shareholders’ equity
Minority interest
Grants related to assets and deferred income
Total provisions
Provision for replacement and full warranty and amortization of capital employed in publicly-owned networks Provision for liabilities and charges
Subordinated securities
Project financing
Other long-term debt
Total long-term debt
Other long-term liabilities
Total capital employed
Accounts payable
Short-term debt
Total current liabilities
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
1996
1995
11,334.5
24,726.8
81,597.9
11,771.8
15,648.3
82,791.7
11,039.3
16,946.0
77,590.0
7,015.7
(33,588.7)
55,024.9
16,466.6
5,086.7
8,222.9
8,216.1
(33,618.8)
57,389.0
12,186.6
3,541.9
9,722.2
7,530.0
(29,610.9)
55,509.1
10,987.0
3,705.5
10,789.2
15,644.6
45,420.8
136,507.0
27,296.8
66,348.5
10,281.3
17,785.4
121,712.0
258,219.0
14,967.9
40,468.6
125,277.7
25,919.7
65,623.4
10,584.7
12,838.2
114,966.0
240,243.7
11,575.0
37,056.7
120,551.1
26,825.5
63,227.4
9,942.6
11,265.3
111,260.8
231,811.9
13,404.5
21,235.1
10,271.7
44,911.3
11,428.9
3,035.0
35,617.0
12,261.3
15,469.4
5,951.2
33,681.9
5,417.7
2,408.8
28,679.9
11,739.6
13,517.2
4,918.8
30,175.6
6,044.8
1,769.8
28,861.9
10,221.8
25,395.2
1,216.9
5,918.2
38,166.7
44,084.9
4,050.2
144,294.2
91,651.4
22,223.4
111,874.8
258,219.0
10,047.8
18,632.1
1,252.1
5,715.0
38,228.0
43,943.0
3,556.5
118,939.9
86,733.4
34,570.4
121,303.8
240,243.7
13,287.8
15,574.1
1,298.6
6,070.5
40,703.4
46,773.9
3,264.2
118,188.8
80,190.7
33,432.4
113,623.1
231,811.9
Source: CGE 1997 Annual Report.
17
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799-019
Vivendi (A): Revitalizing a French Conglomerate
Exhibit 6 Vivendi Consolidated Statement of Changes in Financial Position (in millions of
French francs)
Uses
1997
Sources
Gross cash flow from operations (including net gains from disposal of fixed assets)
Issue of parent company stock
Minority interest in capital increases of subsidiaries
Proceeds from disposal of fixed assets
Increase in other long-term liabilities
Change in working capital
Total
1995
36,484.0
947.2
2,778.2
273.8
344.8a
16,246.2
263.6
2,050.0
3,332.9
4,128.0
16,662.5
3,882.9
1,472.2
1,751.1
1,416.6
1,437.8
42,265.8
1,342.6
27,363.3
1,213.8
26,399.1
1997
Capital expenditure and acquisition of investments
Property assets held as fixed assets
Deferred charges
Acquisition of other financial fixed assets
Repayment of long-term debt
Dividends paid to parent company shareholders and to the minority interest in consolidated subsidiaries
Total
1996
1996
1995
9,509.7
7,118.3
14,883.3
23,038.0
1,961.9
(14,245.4)
42,265.8
7,533.8
2,473.9
3,848.3
7,658.5
835.7
5,013.1
27,363.3
4,869.7
1,670.9
1,568.1
5,324.1
1,160.1
11,806.2
26,399.1
Source: CGE 1997 Annual Report. aIncluding FF67.9m for reimbursement of subordinated securities.
18
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Vivendi (A): Revitalizing a French Conglomerate
Exhibit 7
799-019
Vivendi Revenue, 1994-2000E by Division (FFm)
1994
Water
Energy
Waste management
Urban transport
(=) Utilities
Construction
Property
Communications (Cegetel)
Media (Havas)a
Others + parent company
Total
1995
1996
1997
1998E
1999E
2000E
37,319
20,503
11,440
3,412
72,674
59,292
9,998
4,193
1,339
8,662
156,158
38,877
24,551
12,733
3,595
79,756
56,966
8,660
4,530
1,783
11,266
162,961
41,091
25,852
14,599
6,308
87,849
54,351
8,222
5,929
1,451
8,112
165,915
42,400
25,400
15,050
11,100
93,950
52,500
9,500
10,900
0
266
167,116
43,500
30,600
17,300
13,532
104,932
50,727
10,300
13,348
38,290
0
217,597
44,900
33,600
18,576
14,885
111,961
50,000
10,900
18,194
40,608
0
231,663
46,400
37,000
20,000
16,374
119,774
50,000
11,600
24,219
43,638
0
249,231
1998E
1999E
2000E
Source: Analyst’s Report, Paribas, May 1998.
Exhibit 8
Vivendi Operating Profit, 1994 to 2000E (FFm)
1994
Water
Energy
Waste management
Urban transport
(=) Utilities
Construction
Property
Communications (Cegetel)
Media (Havas)a
Others + parent company
Total
1995
1996
1997
2,499
1,755
895
193
5,342
638
-1,734
-798
-479
708
3,677
2,918
1,786
871
186
5,761
203
-3,822
-843
-476
877
1,700
3,064
2,000
725
187
5,976
-22
-1,352
-1,098
-470
811
3,845
2,800
1,800
1,100
292
5,992
282
-582
-1,200
-100
-221
4,171
1997
2,965
1,940
1,275
360
6,540
341
-530
450
985
-350
7,436
3,300
2,100
1,585
525
7,510
423
-150
2,347
1,911
0
12,041
3,800
2,320
189
705
8,720
525
100
4,264
2,481
0
16,090
Source: Analyst’s Report, Paribas, May 1998.
Exhibit 9
Vivendi Cash Flow, 1994 to 2000E (FFm)
1994
Water
Energy
Waste management
Urban transport
(=) Utilities
Construction
Property
Communications (Cegetel)
Media (Havas)a
Others + parent company
Total
1995
1996
3,900
2,300
1,250
300
7,750
2,100
-2,100
-205
-266
1,712
8,991
3,800
2,000
1,304
320
7,424
1,000
-4,800
-112
213
1,145
4,870
3,900
2,300
1,200
325
7,725
500
-2,900
900
-400
1,709
7,534
3,300
1,800
1,600
500
7,200
1,292
-192
1,600
0
-390
9,510
1998E
3,900
2,900
1,950
600
9,350
1,691
300
3,316
1,609
713
16,979
1999E
4,420
3,400
2,300
800
10,920
1,771
700
4,114
2,870
800
21,175
2000E
4,900
3,700
2,550
900
12,050
1,800
800
7,064
3,135
200
25,049
Source: Analyst’s Report, Paribas, May 1998. aHavas is consolidated over 9 months in 1998 and 12 months in 1999.
19
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799-019
Exhibit 10
Vivendi (A): Revitalizing a French Conglomerate
Cross Ownership—“Noyaux Durs”—1997
Investors
% Owned
Saint Gobain
UAP-Axa
Alcatel Alsthom
BNP Group
Société Générale
7.68
6.66
2.05
0.84
0.92
18.15%
Portfolio Holdings
% Voting
13.70
4.30
3.68
1.50
1.16
24.34%
Market
Value (Ffrm)
Company
% Owned
Saint Gobain
Alcatel Alsthom
UAP-Axa
Société Générale
Sogeparc
Eiffage
Washington Baltimore a through FACIC
Other
7.83
1.62
0.23
1.27
19.90
18.70
5,991
2,011
321
989
553
570
10.00
1,214
816
12,445
Source: CGE Annual Report 1997. aSubsidiary of Southwestern Bell Corporation.
Exhibit 11
Composition of CGE Shareholders—1995 to 1997
31/08/95
Foreign investors
Employees
Self-controlled
Total
31/01/97
31/12/97
24.64%
24.31%
22.57%
26.85
34.86
36.07
2.09
2.34
100%
General public (France)
Industrial and institutional investors (France)
31/08/96
34.00
38.17
2.11
1.41
100%
32.59
42.15
1.87
0.82
100%
26.38
43.37
1.95
1.45
100%
Source: CGE 1997 Annual Report.
20
Purchased by Thanh Phan (thanh.emba@gmail.com) on September 03, 2012
Vivendi (A): Revitalizing a French Conglomerate
Exhibit 12
May 1998
799-019
Vivendi Versus CAC 40 Index Annual Total Returns to Shareholders: January 1994 to
60%
50%
40%
30%
20%
10%
Vivendi
0%
CAC 40
-10%
-20%
-30%
-40%
1994
Source:
1995
1996
1997
1998
Datastream.
21
Purchased by Thanh Phan (thanh.emba@gmail.com) on September 03, 2012 