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NBCU to Gain Full Control of VUE

Jun 8, 2005  •  Post A Comment

The years-long feud between Barry Diller’s IAC/InterActiveCorp and French conglomerate Vivendi Universal ended Wednesday when IAC agreed to sell its 5.4 percent stake in Vivendi Universal Entertainment to NBC Universal for $3.4 billion, giving NBCU full control of VUE.

The sale ends years of litigation between the two companies on various matters, including whether Vivendi owed IAC $620 million in taxes. It also resolves an obligation by Vivendi to pay up to $520 million to NBCU parent General Electric should NBCU sell any of its theme parks during the next three years.

NBCU is 80 percent controlled by GE, while the remaining 20 percent is owned by Vivendi. VUE was created in 2002 when Vivendi’s Universal Studios joined forces with IAC’s entertainment assets. Vivendi controlled VUE until VUE combined with NBC last year.

As part of the deal, NBCU is getting 56.6 million IAC Class B common shares, which have a market value of $1.4 billion, and cash, including $865 million in proceeds from the sale of U.S. Treasury bonds that secured IAC’s stake in VUE.

Vivendi said it would receive a total cash payment of $235 million and book a one-time gain of $244 million, while IAC expected to record a $330 million gain related to the transaction. In addition, IAC said it would receive $100 million in advertising on NBCU’s cable and broadcast networks during the next three years.

In addition, the transaction changes some of the terms of the agreement that brought VUE and NBC together last year. Vivendi will now have until January 2007 — a one-year extension — to decide whether it wants to exercise an option to sell its 20 percent stake in NBCU, while GE now has until May 2010 to decide whether it wants to buy Vivendi’s stake in NBCU — also a one-year extension.