WHAT A WEEK TO BE NAMED DAVIS
The reports point out, however, that any deal could face serious obstacles, including the opposition of Vivendi Universal Entertainment Chairman Barry Diller, as well as the difficulty of financing such a large bid in the current business environment.
Davis' group contacted VU with its proposal and some preliminary discussions have taken place, including a meeting in Paris in recent weeks, according to the Wall Street Journal.
The 77-year-old Davis, who owned the 20th Century Fox studio in the early 1980s, is in the midst of pulling together a group of investors to try to acquire Vivendi's entertainment assets, including Universal Studios and Universal Music Group, the USA cable networks and Universal theme parks. Those familiar with the matter say Davis has expressed interest in buying either all of the entertainment assets or a majority stake if Vivendi doesn't want to part with the entire business.
Deciding the fate of Vivendi's entertainment assets has been a secondary priority, as its new chief executive, Jean-Rene Fourtou, has focused first on reducing the company's $19 billion debt load. But the out-of-the blue bid from Davis' group represents a possible alternative to what has been widely seen as the most likely scenario: placing the entertainment holdings into a separate publicly traded company to be headed by Diller, the Journal said.
Vivendi is taking Davis seriously, people close to the company told the Journal. Davis has been talking to David Bonderman's Texas Pacific Group and Bain Capital Inc., two prominent private-equity firms, and a couple of banks to help finance his proposal, according to people familiar with the matter. One high-level person noted that given the quality of some of Davis' backers, "nobody is going to dismiss it."
Further talks between Davis' group and Vivendi aren't expected to take place until the beginning of next year, as Vivendi is currently dealing with other issues, such as a pending battle for control of Cegetel SA, the French telecommunications company in which Vivendi owns a stake, the paper said.
Some Vivendi insiders said the $15 billion offer was too low to be taken seriously, others said that, depending on how it was structured, it could provide the answer to many of Vivendi's financial woes—including nearly $19 billion in media debt.
Skeptics noted that Fourtou has not been seeking buyers for the Universal assets, unlike other parts of the French media empire that are being auctioned off to pare the company's debt load.
