Bronfman eyes Vivendi’s U.S. entertainment units
May 21, 2003 - The Hollywood Reporter
PARIS— Vivendi Universal vice chairman Edgar Bronfman Jr. is leading a consortium to buy the company’s U.S. entertainment assets, Vivendi Uni confirmed Wednesday.
Vivendi Uni also said Wednesday that it has reached an agreement with both Bronfman and his father Edgar Bronfman Sr. that will suspend their activities on the company’s board of directors, clearing the way for sale negotiations.
Neither of the Bronfmans was present at Vivendi Uni’s May 19 board meeting, during which members discussed the sale of the U.S. entertainment assets. Edgar Bronfman Jr. and New York cable operator Cablevision have formed a consortium for the buyout that includes Wachovia Bank and Wachovia Securities along with Merrill Lynch.
The sale price for the U.S. entertainment assets could reach well over $20 billion as Bronfman’s group goes up against a bevy of potential Vivendi Uni bidders including Texas oilman Marvin Davis, Liberty Media chairman John Malone, General Electric and Viacom.
Vivendi Uni’s U.S. entertainment assets include Universal Studios, theme parks, the USA and Sci Fi cable channels and the Universal Music Group. The latter could be a potential sticking point in the deal as current Vivendi Uni chief Jean-Rene Fourtou has temporarily taken the music division off the block because of the music industry’s current slump. Fourtou confirmed Vivendi Uni’s imminent exit from film and television at an early May shareholder meeting. But on Wednesday, a spokesman for Vivendi would neither confirm nor deny if Universal Music Group was part of the negotiations.
The potential bidding war is music to Fourtou’s ears and could clear Vivendi Uni out from under its staggering debt. Fourtou has already chopped $9 billion off the company’s load and has projected cutting another $7 billion by year’s end.
In 2000, Edgar Bronfman Jr. sold the entertainment assets to Vivendi Uni as part of a $34 billion stock sale of Seagram. Because of the subsequent 84% drop in Vivendi Uni stock, the Bronfman family’s $6.5 billion stake in the company has winnowed down to $3 billion. Edgar Bronfman Jr. was the leading force in ex-VU chief Jean-Marie Messier’s ouster in July.
The news of the Bronfman-led bid bumped Vivendi Uni’s stock up 5.8% on Paris’ stock exchange to close the day at 14.70€ ($17.20).