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VUE: No Piecemeal Sale

Jul 28, 2003  •  Post A Comment

Sources close to Vivendi Universal are denying reports that the company is considering selling some of its U.S. entertainment assets in pieces rather than as a single unit, saying such a move would have huge tax implications for the French conglomerate.
They are also refuting claims that Vivendi, whose management has been frustrated by bids it deems too low, is demanding that would-be suitors be prepared to offer at least $14 billion for Vivendi Universal Entertainment assets, which include film, television and cable properties.
A decision to sell off the assets of VUE in pieces would be a significant about-face for Vivendi, which several weeks ago instructed the six bidders to make bids for all of VUE. Splitting up VUE would have major tax implications for Vivendi at a time when it is more interested in getting cash than it is in spending it.
The groups vying for the VUE assets include Metro-Goldwyn-Mayer, Liberty Media, General Electric’s NBC unit and investment groups headed up by Vivendi Vice Chairman Edgar Bronfman Jr. and oil billionaire Marvin Davis.
Under a host of scenarios, the company could be forced to pay fairly hefty sums to the Bronfman family, InterActiveCorp Chairman and CEO Barry Diller or both, if VUE’s assets are split. Sources say the tab to the Bronfmans, who are majority shareholders in Vivendi, could be anywhere from $700 million to $2.5 billion, while Mr. Diller claims he would get $620 million. Given the company’s need for cash, these sources say, it is unlikely it would want to risk splitting up the assets.
Meanwhile, another person close to the French company said management has never set a floor price for the assets, and that the priority all along has been to ensure that any sale of the assets would maximize value for Vivendi Universal’s shareholders, whose investment was pummeled when the company teetered on the brink of bankruptcy.
Those developments come as a source close to Comcast confirmed last week that the cable giant is taking a preliminary look at the VUE assets but has not made a decision yet about whether to make a play for any or all of VUE.