VIVENDI MAKES $30 BILLION PLAY
FOR SEAGRAM
The on-again, off-again talks of French media and telecom company Vivendi purchasing Canadian beverage and entertainment behemoth Seagram Co. are most definitely on again—and a deal has been placed on the fast track.
Vivendi has resumed discussions to buy the Universal Music Group parent company for a stock and cash offer that could be worth about $30 billion, according to inside sources and widespread media reports. Vivendi may also absorb some $9 billion in Seagram debt, which would drive the price tag up nearer $40 billion. The French company has declined comment on this point.
According to a Bloomberg story on Thursday (6/15), Vivendi may consider the Seagram deal as early as Monday for $40 billion, no cash all stock.
"There is a Vivendi board meeting next Monday and clearly we will talk about this," Vivendi Chairman Jean-Marie Messier told reporters.
Vivendi, its pay TV empire Canal Plus and Seagram are said to be in advanced negotiations to form a global media and entertainment giant with a market value near $100 billion.
Sources said an agreement in principle has already been reached on how the new company would be structured and its strategy for moving forward, reports The Hollywood Reporter. A final agreement is probably a few weeks away, sources close to the negotiations said, but all parties expect the deal to close.
If the deal is completed, Seagram will be bought by Vivendi in an all-stock transaction valuing the Canada-based company at more than $70 a share, or $31 billion.
The entity, expected to be called Vivendi Universal, would be headed by Vivendi Chairman Jean-Marie Messier. Seagram President and CEO edgar bronfman',390,400);">edgar bronfman',390,400);">Edgar Bronfman Jr. would retain a senior executive role—very likely closely involved with the company's music operations, currently the largest in the world. The merger, if completed, would likely involve widespread changes in Universal's senior management.
The deal aims to leverage Universal's deep content in music, film and television with the content and distribution platforms of Vivendi and Canal Plus. In particular, the new company would seek to develop rapidly online and wireless distribution channels for its music and filmed entertainment.
Vivendi was previously in discussions with Seagram in April before talks broke down. Vivendi balked at a purchase price then, leading Seagram to investigate options with Sony, News Corp., Disney and BMG.
If this deal is completed, the new company would encompass all of the partners' entertainment and non-entertainment operations, including Seagram's wine and spirits businesses and Vivendi's water and waste-treatment operations and telecommunications businesses.
In entertainment, its presence would be huge, combining Universal Music Group (which holds over a 30% share of the marketplace), Universal's 4,000-title film library, Canal Plus' 5,000-feature catalog, the 28,000 hours of television programming owned by Universal and Canal Plus' TV library of nearly 10,000 programming hours. These content businesses would be bundled with Universal's theme-park interests, Canal Plus' European pay TV platform and Vivendi's extensive telephone, wireless and Internet interests.
Under a proposed structure for the deal, Vivendi, which is considering transforming itself into a pure media company through a reverse takeover by its Canal Plus subsidiary, would be free to consider spinning off Seagram's wine and spirits group, speculators said. Such a move would also involve divesting its environmental businesses. Vivendi is already planning to float Vivendi Environment, which contains its water and other utility assets, some time before or after August.
Sources estimate that the combined operations would earn revenue next year of about $65 billion.
On Wall Street on Wednesday, Seagram's stock gained closed at 60 1/8.
