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05-25-2003, 12:24 PM
Vivendi May Extend Gains as Fourtou Seeks Universal Buyers
Paris, May 23 (Bloomberg) -- Shares of Vivendi Universal SA, the world's second-biggest media company, may extend the past three days' 13 percent gain on optimism a planned offer by Edgar Bronfman Jr. for the French company's U.S. media assets may attract rival bids, investors said.
Bronfman, whose family owns 4.2 percent of Vivendi, said this week he's forming a group to bid for the assets. Others that have shown interest in the units are CBS owner Viacom Inc. and John Malone's Liberty Media Corp., and billionaire Marvin Davis has planned to offer $20 billion. Vivendi Director Claude Bebear has said General Electric Co.'s NBC television network may bid.
Vivendi Chief Executive Officer Jean-Rene Fourtou has said he will find a buyer this year for Vivendi Universal Entertainment LLC, which include the Universal film studio and theme parks, and its music unit. Fourtou has reversed predecessor Jean-Marie Messier's plan to turn the 150-year-old water utility into an entertainment group, and is now focusing on cutting debt.
``For Fourtou, any potential buyer stating an interest publicly -- whether he is serious or less serious -- is good news,'' said Romain Boscher, who helps manage the equivalent of $7 billion including Vivendi stock at Groupama Asset Management in Paris. ``It's part of the strategy. Fourtou wants as many potential buyers as possible to get the best price out of them.''
Fourtou, who took over from Messier in July last year, has pledged to sell a total 16 billion euros ($18.7 billion) of assets by the end of 2004. Messier spent $77 billion on takeovers, trying to transform Vivendi into a rival to AOL Time Warner Inc. Instead, Messier brought Vivendi near bankruptcy in 2002.
Vivendi shares today fell 1.6 percent to 15.15 euros as of 1:09 p.m. in Paris. The stock earlier rose as high as 15.77 euros from 13.9 euros before Bronfman announced his plan Wednesday.
Summer Decision
Fourtou said last month that Paris-based Vivendi was talking with a ``lot of people'' potentially interested in the U.S. assets and that he gave himself until the summer to decide on the sale.
Bronfman's move yesterday ``may be a poker game, for all I know,'' said Thierry Girardet, who helps manage the equivalent of $59 million at Fival SA in Paris, including Vivendi shares. ``It is very difficult to know how serious he is.''
Starting in 1995, Bronfman used the resources of his Canadian family's Seagram Co. liquor business to buy film and music businesses. He sold Seagram to Vivendi for $30 billion in December 2000. The Bronfman family's main holding after the sale, a 7.5 percent stake in Vivendi, was worth 6 billion euros ($7 billion) at the time. That value has dwindled since then.
Even after the rise of Vivendi shares in the two days since Bronfman said he was interested in buying the U.S. assets, the family's stake is worth about 700 million euros.
``The cynical view is that the Bronfman family still holds a 4 percent stake in the company, and he has an interest in letting other potential bidders know he is also interested,'' said Patrick Wollenberg, who helps manage the equivalent of about $14 billion at Robeco Groep, and holds ``few'' Vivendi shares. ``It could be a move to drive up the proceeds.''
Financing
Bronfman, who is vice chairman of Vivendi, will need partners to back the bid for the assets, which include the USA and Sci-Fi cable television networks and the television studio that produces shows such as ``Law & Order.''
Cablevision Systems Corp., the largest cable-television company in the New York area, may join his bid, said a Bronfman spokesman who declined to be named. He's also talking to private equity firms to raise funds for a bid, the spokesman said.
``Bronfman clearly has an interest in buying back the assets, but I am not sure he can get the financial means,'' said Groupama's Boscher, who started buying Vivendi shares at the end of last year.
Liabilities
Some investors are less optimistic about the sale because of tax liabilities and lawsuits linked to contracts signed by Fourtou's predecessor.
USA Interactive, the company controlled by Hollywood veteran Barry Diller, sued Vivendi in April over a tax dispute stemming from Vivendi's $10.3 billion purchase of USA's cable networks last year. Vivendi's liability is worth about $620 million, USA said.
USA also claimed the right to restrict Vivendi from selling some of the assets unless Vivendi guarantees future tax and interest payments owed to USA.
In addition, Malone's Liberty Media filed a lawsuit against Vivendi in March, asking a federal judge in New York to void the sale of USA Networks and citing fraud.
Vivendi has said the suits by Diller and Liberty Media are ``without merit.''
As part of Vivendi's acquisition of the USA assets, Liberty received 37.6 million Vivendi shares for its stake in USA Networks and a European television production company.
Taxes, Interest
Vivendi also may have to pay $2.7 billion in U.S. taxes and interest on behalf of Seagram as potential liabilities on purchases made under Messier mount. The U.S. Internal Revenue Service challenged the way Seagram reported taxes after selling back 156 million DuPont Co. shares to the chemical maker in 1995, Vivendi said in a document filed with the Securities and Exchange Commission on March 28.
Separate tax agreements with the two sellers, Seagram and Diller, make it harder to sell Universal entertainment unit as a whole or in parts.
``We've been avoiding Vivendi shares over the Messier years and will continue to do so because there are too many strings left by Messier,'' said Salah Seddik, an analyst at Richelieu Finance, a fund in Paris that manages about $700 million of assets.
Paris, May 23 (Bloomberg) -- Shares of Vivendi Universal SA, the world's second-biggest media company, may extend the past three days' 13 percent gain on optimism a planned offer by Edgar Bronfman Jr. for the French company's U.S. media assets may attract rival bids, investors said.
Bronfman, whose family owns 4.2 percent of Vivendi, said this week he's forming a group to bid for the assets. Others that have shown interest in the units are CBS owner Viacom Inc. and John Malone's Liberty Media Corp., and billionaire Marvin Davis has planned to offer $20 billion. Vivendi Director Claude Bebear has said General Electric Co.'s NBC television network may bid.
Vivendi Chief Executive Officer Jean-Rene Fourtou has said he will find a buyer this year for Vivendi Universal Entertainment LLC, which include the Universal film studio and theme parks, and its music unit. Fourtou has reversed predecessor Jean-Marie Messier's plan to turn the 150-year-old water utility into an entertainment group, and is now focusing on cutting debt.
``For Fourtou, any potential buyer stating an interest publicly -- whether he is serious or less serious -- is good news,'' said Romain Boscher, who helps manage the equivalent of $7 billion including Vivendi stock at Groupama Asset Management in Paris. ``It's part of the strategy. Fourtou wants as many potential buyers as possible to get the best price out of them.''
Fourtou, who took over from Messier in July last year, has pledged to sell a total 16 billion euros ($18.7 billion) of assets by the end of 2004. Messier spent $77 billion on takeovers, trying to transform Vivendi into a rival to AOL Time Warner Inc. Instead, Messier brought Vivendi near bankruptcy in 2002.
Vivendi shares today fell 1.6 percent to 15.15 euros as of 1:09 p.m. in Paris. The stock earlier rose as high as 15.77 euros from 13.9 euros before Bronfman announced his plan Wednesday.
Summer Decision
Fourtou said last month that Paris-based Vivendi was talking with a ``lot of people'' potentially interested in the U.S. assets and that he gave himself until the summer to decide on the sale.
Bronfman's move yesterday ``may be a poker game, for all I know,'' said Thierry Girardet, who helps manage the equivalent of $59 million at Fival SA in Paris, including Vivendi shares. ``It is very difficult to know how serious he is.''
Starting in 1995, Bronfman used the resources of his Canadian family's Seagram Co. liquor business to buy film and music businesses. He sold Seagram to Vivendi for $30 billion in December 2000. The Bronfman family's main holding after the sale, a 7.5 percent stake in Vivendi, was worth 6 billion euros ($7 billion) at the time. That value has dwindled since then.
Even after the rise of Vivendi shares in the two days since Bronfman said he was interested in buying the U.S. assets, the family's stake is worth about 700 million euros.
``The cynical view is that the Bronfman family still holds a 4 percent stake in the company, and he has an interest in letting other potential bidders know he is also interested,'' said Patrick Wollenberg, who helps manage the equivalent of about $14 billion at Robeco Groep, and holds ``few'' Vivendi shares. ``It could be a move to drive up the proceeds.''
Financing
Bronfman, who is vice chairman of Vivendi, will need partners to back the bid for the assets, which include the USA and Sci-Fi cable television networks and the television studio that produces shows such as ``Law & Order.''
Cablevision Systems Corp., the largest cable-television company in the New York area, may join his bid, said a Bronfman spokesman who declined to be named. He's also talking to private equity firms to raise funds for a bid, the spokesman said.
``Bronfman clearly has an interest in buying back the assets, but I am not sure he can get the financial means,'' said Groupama's Boscher, who started buying Vivendi shares at the end of last year.
Liabilities
Some investors are less optimistic about the sale because of tax liabilities and lawsuits linked to contracts signed by Fourtou's predecessor.
USA Interactive, the company controlled by Hollywood veteran Barry Diller, sued Vivendi in April over a tax dispute stemming from Vivendi's $10.3 billion purchase of USA's cable networks last year. Vivendi's liability is worth about $620 million, USA said.
USA also claimed the right to restrict Vivendi from selling some of the assets unless Vivendi guarantees future tax and interest payments owed to USA.
In addition, Malone's Liberty Media filed a lawsuit against Vivendi in March, asking a federal judge in New York to void the sale of USA Networks and citing fraud.
Vivendi has said the suits by Diller and Liberty Media are ``without merit.''
As part of Vivendi's acquisition of the USA assets, Liberty received 37.6 million Vivendi shares for its stake in USA Networks and a European television production company.
Taxes, Interest
Vivendi also may have to pay $2.7 billion in U.S. taxes and interest on behalf of Seagram as potential liabilities on purchases made under Messier mount. The U.S. Internal Revenue Service challenged the way Seagram reported taxes after selling back 156 million DuPont Co. shares to the chemical maker in 1995, Vivendi said in a document filed with the Securities and Exchange Commission on March 28.
Separate tax agreements with the two sellers, Seagram and Diller, make it harder to sell Universal entertainment unit as a whole or in parts.
``We've been avoiding Vivendi shares over the Messier years and will continue to do so because there are too many strings left by Messier,'' said Salah Seddik, an analyst at Richelieu Finance, a fund in Paris that manages about $700 million of assets.