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Vivendi's Family Affair

It’s a deal that only someone with the last name Bollore could love.

European media group Vivendi SA proposed on Thursday to buy a 60 percent stake in advertising agency Havas SA for 2.3 billion euros ($2.5 billion), or 9.25 euros a share, representing a premium of about 9 percent over Wednesday's closing level. Assuming completion of the deal, Vivendi will then offer the same per-share price to minority holders of the world’s sixth-largest ad group, which depending on how many accepted would add another 1.6 billion euros to the bill.

Conveniently, billionaire Vincent Bollore, the chairman and biggest shareholder of Vivendi, is the buyer and the seller since his Bollore Group owns the Havas stake. What could possibly go wrong?

As I wrote last year, sticking an ad agency with 18,500 employees into a company that earns half its revenue from pay-TV and half from music isn't exactly an established model. Once Vivendi consists of Canal Plus, Universal Music Group and Havas there is a risk that it goes back to the bad old days of being a conglomerate of disparate assets trading at a discount to their value. That would undermine one of the key aims of a Bollore-led remake of Vivendi, which saw it sell off four of six businesses since 2013.

Vivendi argues...