With the exit of Vivendi, the CAC 40 loses one of its founding members

Quite a symbol. This Friday, June 16, 2023 marks the last session within the CAC 40 for Vivendi. The flagship index of the Paris Stock Exchange thus loses one of its founding members. Today’s Vivendi, refocused on television, advertising and publishing, however, no longer has much to do with its venerable ancestor, the Compagnie Générale des Eaux, which joined the CAC 40 when it was created 35 years ago.

La Générale, as the group was nicknamed, was then an unparalleled conglomerate today, bringing together more than 2,000 companies and present in community services, energy, real estate, construction, telecommunications and the media. . Founded under the Second Empire, in 1853, to ensure the supply and distribution of drinking water in urban areas, starting with Lyon, it has in fact greatly diversified under the leadership of its boss Guy Dejouany, at the leader of the group between 1976 and 1996.

From water distribution to the internet revolution

When the CAC was created in 1988, La Générale weighed in at 3.9% of the index, making it the 11th largest listed company in Paris. Twelve years later, at the height of its stock market glory, the group has become the symbol of the digital “new economy”. It has a capitalization of more than 80 billion euros and is then the second largest French listed company, behind France Telecom (now Orange).

It was Guy Dejouany’s successor at the head of La Générale who led the conglomerate’s metamorphosis into a herald of the internet revolution. Jean-Marie Messier is not yet 40 years old when he is propelled to the head of the group. He quickly won over the Stock Exchange and was acclaimed by the media. Its dynamism and its extraordinary ambitions make investors dream. He sells more than 18 billion euros of ets to refocus the conglomerate around two poles: community services and communication, which includes telecoms and media.

Jean-Marie Messier, Myself Master of the World

Jean-Marie Messier, known by his initials “J2M”, champions the internet revolution. He wants Vivendi, the new name of the “Generale” since 1998, to be one of the world giants of this new economy. While in the United States the AOL-Time Warner merger captured attention, he worked tirelessly to create Vivendi Universal, a union of the French Vivendi, the Canal+ group, and the Canadian Seagram, owner of the Universal studios.

He even publishes a book on the promises of the “new economy” entitled “J6M.com”, taking up the nickname given to him by “Les Guignols de l’Info”: Jean-Marie Messier, Myself Master of the world. His visionary ideas on the future of entertainment in a world connected by the internet are fascinating. Vivendi’s share price soars. Under 6 euros in 1994, it was close to 40 euros at its peak on March 10, 2000.

The day before, on Wall Street, the Nasdaq with strong technological coloring peaked at more than 5,000 points. The internet bubble burst, the US index will not return to this level before 2015. For Vivendi, the setbacks are just beginning. While the effervescence gives way to panic on the stock market, “J2M” persists. He seals the marriage with Seagram and Canal+ in December 2000 and pursues large-scale acquisitions across the Atlantic.

Revenge of the “old economy”

But the markets soon no longer follow. Debt, largely ignored during the years of stock market euphoria, now makes us fear the worst for the future of the group. Vivendi’s share price collapsed by more than 90% in two and a half years. Shareholders accuse him of having deceived them about the company’s financial situation. The former darling of the markets is pushed out: Jean-Marie Messier resigns in July 2002 as splits and et sales accelerate. However, Vivendi will never regain the heights reached during the internet bubble.

Twenty years later, “everything Jean-Marie Messier said at the time has come true, but he was ten years ahead of technology,” says a manager. Another draws a parallel with the current craze for artificial intelligence: “At each phase of innovation, we find similar stories,” he explains. “The winners of the day according to the market are not necessarily those who will ultimately win, nothing is certain,” he adds.

In any case, since Vivendi split up the music major Universal Music in the fall of 2021, which will turn out to be an exceptional deal inherited from the Seagram empire and Vincent Bolloré, Vivendi’s strongman, had the patience to let it grow, the group no longer has the size required to be in the CAC 40.

Ultimately, it is the “old economy” activities stemming from Générale des Eaux that continue to carry its legacy high in the CAC 40: Vivendi Environnement, now Veolia, and the former Société Générale d’Entreprises, now Vinci.