Vivendi, GE agree to exclusive talks on merging entertainment assets and NBC
Tuesday, September 2nd 2003, 12:00 am
By: News On 6
PARIS (AP) _ Vivendi Universal SA and General Electric Co. agreed Tuesday to enter exclusive negotiations to merge Vivendi's U.S. entertainment assets and GE's NBC division, the French media and utilities conglomerate said.
The decision to go with GE followed months of negotiations and efforts by Vivendi to find a partner for its glamorous entertainment assets.
Vivendi Universal Entertainment properties include the Universal film and TV studios _ producers of ``The Hulk'' and ``Seabiscuit'' _ cable channels such as the USA Network and the Sci-Fi Network, as well as Universal's theme parks and television production business. NBC owns the NBC broadcast network and cable networks MSNBC and CNBC.
Vivendi said if they reach a final agreement, the new company would be 80 percent owned by GE and 20 percent by Vivendi.
The combined revenue of the assets involved was estimated at $13 billion in 2003, Vivendi said in a statement.
Vivendi said the combined media and entertainment business would be headed by Bob Wright, longtime leader of NBC and vice chairman of GE.
Once the deal is closed, the shareholders of Vivendi Universal would receive $3.8 billion in cash and stock and $1.6 billion in debt reduction as part of the transaction, Vivendi's statement said.
``I think we are in front of a very good deal,'' Vivendi board member Fernando Falco y Fernadez de Cordova said after emerging from a closed door meeting where the board weighed GE's bid against another from a group led by investor Edgar J. Bronfman Jr.
Vivendi chairman Jean-Rene Fourtou scheduled a news conference for later Tuesday at the French media and utility conglomerate's Paris headquarters.
Bronfman, who once controlled the Universal properties as chief executive of Seagram Co., spent the weekend in a last-ditch lobbying effort to salvage his bid, a source familiar with the matter told the Associated Press.
Vivendi Universal shares rose 4.1 percent to close at $18.06 per share in Paris trading Tuesday. GE shares were up 36 cents at $29.93 in afternoon trading on the New York Stock Exchange.
Vivendi has been hoping to fetch $14 billion for the Universal assets to pay down huge debts run up during a buyout spree under former chief executive Jean-Marie Messier.
Some of the biggest titans of the U.S. media world expressed interest in Vivendi's entertainment arm during the monthslong bidding process, including cable TV mogul John Malone of Liberty Media Corp., CBS and MTV parent Viacom Inc. and Metro-Goldwyn-Mayer Inc.
Both MGM and Malone said they were dropping out of the bidding process because they felt the price was too high. Viacom had expressed interest only in the cable channels, and was effectively left out of the final round of bidding when Vivendi said it would continue talks only with NBC and Bronfman's group.