Vivendi Rejects Breakup Plan

Vivendi rejected a proposal from a top shareholder to break up the company as it reported Wednesday that its first-quarter net income rose 41% on strong growth at its music and games businesses.

The media and telecommunications company said the proposal came from Sebastian Holdings, an investment fund that had recently become Vivendi’s largest individual shareholder with a 4% stake.

Vivendi said its supervisory and management boards rejected the proposal, calling it “unrealistic” on economic and legal grounds.

The company issued a statement saying it had notified France’s Financial Markets Authority about media reports suggesting that the breakup proposal had been prepared with management backing.

“Such suggestions are false,” the statement said.

Vivendi earned 707 million euros ($906 million) in the first quarter, up from 501 million euros a year earlier. Analysts surveyed by Dow Jones Newswires had expected profit of 561 million euros ($719 million).

Universal Music Group, one of the world’s largest record companies by sales, reported that operating profit more than doubled to 90 million euros ($115 million) from 38 million euros.

Vivendi says it is looking for acquisitions in music publishing.

Operating profit rose to 990 million euros ($1.27 billion) from 921 million euros in the first quarter last year.

Operating profit at Vivendi’s video games unit, which had been up for sale a couple of years ago, more than doubled to 23 million euros ($29 million), boosted by the success of the title “World of Warcraft.”