PARIS (AP) â€” French utilities and media conglomerate Vivendi is buying Canadian drinks and entertainment giant Seagram Co. for $30 billion, sealing an ambitious trans-Atlantic merger aimed at creating a major global media player.
The deal announced Tuesday will combine Seagram's film production and music interests with Vivendi's European cable TV, satellite and Internet distribution systems to create a new Paris-based company, Vivendi Universal. The three-way deal also includes Vivendi's cable TV unit, Canal Plus.
Vivendi Universal will have the scale and resources to compete with titans such as AOL Time Warner, the industry leader to be created from the pending merger of America Online and Time Warner. Vivendi Universal will have annual revenues of more than $55 billion and no debt.
The deal combines Seagram's sizable entertainment assets, which include Hollywood's Universal Studios and the Universal Music Group, the world's biggest music company, with Vivendi's various distribution channels.
Jean-Marie Messier, Vivendi's chairman, told a packed news conference in Paris that he wanted ``to make the Internet swing.''
``The Internet of tomorrow will not only be something faster and beautiful,'' said Messier, who will serve as chief of Vivendi Universal. ``The Internet of the future will have more practical services and information, it will have more entertainment and content.''
Seagram's $7 billion to $8 billion drinks business will be sold off following the merger. Vivendi will also float about 30 percent of Vivendi Environment, the company's utilities arm.
The deal will be an all-stock transaction, exchanging Seagram's shares for Vivendi shares. The deal originally valued Seagram at $77.35 per share, or $34 billion. But due to a slide in Vivendi's stock since word of the deal leaked out last week, the transaction is now worth about $68 per Seagram share, or $30 billion.
Vivendi's shares have tumbled a total of 22 percent since last week, including a 7.2 percent decline on Tuesday. Messier brushed off the investor reaction as simply ``speculators playing with stock.''
Seagram stock had bounced last week as news of the deal spread, but the shares gave up some of their ground on Tuesday, slipping $4.437 to $59.313 in late morning trading on the New York Stock Exchange.
Edgar Bronfman, Jr., the chief executive of Seagram, said the three-way merger with Canal Plus created a company ``best positioned to deliver to consumers'' all that fast developing wired and wireless technology had to offer. Bronfman will be vice chairman of the new company.
Once just a nationalized water company, Messier has transformed the firm into a global media giant with classy headquarters just off the Arc de Triomphe in Paris, one of the French capital's most prestigious addresses.
The deal is likely to lead to a shakeup at Canal Plus, the French pay-television company in which Vivendi has a 49 percent stake. Vivendi will buy out the 51 percent of Canal Plus that it does not already own and spin off the TV activities to avoid conflict with French government rules on ownership of domestic TV channels.