Vivendi is in talks with Seagram regarding a possible takeover that could
value the Canadian entertainment and drinks firm at around $37 billion.
The French environmental services and media company and its 49-percent owned
unit Canal Plus, Europe's largest pay-TV operator, announced they were in
three-way negotiations with Montreal-based Seagram. Vivendi and Seagram
were first reported to be talking in March, although those discussions apparently
foundered amid disagreement over the continuing role of Seagram Chief Executive
Edgar Bronfman Jr.
Vivendi warned in a statement that any resulting deal would be based on
the companies' share prices before Wednesday's confirmation of the talks.
Seagram indicated in a separate release that any transaction would be an
all-stock deal. It said the talks started after the French pair made an
approach regarding a "strategic combination".
Seagram stock closed at 53 in New York on Tuesday, up 2-3/8. Vivendi stock
slumped more than 6 percent to 107.7 in early Paris trade Wednesday, while
Canal Plus shares rose 3 percent to 218.
Vivendi has long been interested in expanding its media and communications
activities into North America, while Seagram has been searching for a strategy
to make the most of its entertainment assets, including Universal Music,
the world's largest recorded music publisher, and Hollywood movie corporation
Reports Wednesday indicated Vivendi would pay more than $70 per Seagram
share, valuing the Canadian firm's capital at more than $30.5 billion, on
the basis of 436.43 million shares outstanding at the end of March. At its
fiscal year end on June 30, 1999, Seagram had net debt of around $7 billion.
Vivendi has a market value of $54.8 billion. The company generated
revenue of 41.6 billion and net income of 1.43 billion last year. Canal
Plus has a stock market value of around $27 billion, and had 1999 sales
of 3.3 billion.
If there is a takeover, Vivendi might recoup some of its outlay by selling
Seagram's spirits and beverages and amusement parks divisions. Vivendi,
one of the world's two largest environmental services companies, has changed
markedly in recent years under the stewardship of chief executive Jean-Marie
Messier. The firm has branched out from its origins as a provider of water
and waste treatment services, and now has interests in mobile telephony,
television, new media and publishing.
As well as its Canal Plus holding, Vivendi is a 25 percent shareholder in
British pay-TV firm BSkyB, the second largest investor in the company after
Rupert Murdoch's News Corp. Vivendi has said it will sell its environmental
services division this year.