VU granted time on Cegetel option
October 29, 2002 - The Hollywood Reporter
Vivendi Universal is scheduled to hold a special board meeting in Paris today to discuss the potential sale of its Houghton Mifflin publishing unit and its plans for French telecom firm Cegetel after a French court Monday granted the conglomerate a 30-day deadline extension to exercise its option to match or beat Vodafone Group’s recent bid for control over Cegetel.
Vivendi Uni’s next regular board meeting had been planned for mid-November, but chairman and CEO Jean-Rene Fourtou wanted to discuss recent developments with his directors, sources said.
In a decision reached late Monday, the French business court, La Tribunal de Commerce de Paris, granted Vivendi Uni the extra month on Cegetel, citing a clause providing time for due diligence to a major shareholder looking to buy out one of the others. This gives Vivendi Uni, which has the right of first refusal under Cegetel’s shareholders agreement, until Dec. 10 — instead of Nov. 10 — to counter an offer by Vodafone.
Vodafone recently moved to buy out the stakes of SBC Communications and British Telecom, which own 15% and 26% in Cegetel, respectively. Vivendi Uni, which owns 44% of Cegetel, needs at least €4 billion ($3.93 billion) to match Vodafone’s bid for SBC and thereby take control over cash flow-rich Cegetel.
A company spokeswoman in New York on Monday confirmed the deadline extension but refused to confirm the board meeting or comment on Vivendi Uni’s intentions on Cegetel. Today’s board meeting should further clarify the company’s plans, sources close to the company said.
Besides taking control of Cegetel, Vivendi Uni — already €19 billion ($18.7 million) in debt — could also exit the telecom space entirely and opt to accept a €6.8 billion ($6.7 billion) offer by Vodafone for its 44% stake in Cegetel.
Either way, Monday’s court decision gave Vivendi Uni more time to finalize its planned sale of Boston-based educational publisher Houghton.
Over the weekend, it looked as if Vivendi Uni would stop the initial round of bidding, which by a Friday deadline had failed to produce bids that met the company’s expectations. As a result, observers expected that the company would open a new auction for Houghton to fetch a more satisfactory price.
However, at least one consortium of bidders Monday extended its talks with Vivendi Uni and seemed to make progress toward a purchase agreement, sources close to the situation said.
A spokesman for U.S. private equity firm the Blackstone Group, which leads the consortium with Thomas H. Lee Partners, confirmed Monday that the group was still in the running but declined to comment further.
It remained unclear late Monday what bid price Vivendi Uni would accept for Houghton. The conglomerate, which last year bought Houghton for $2.2. billion, has been looking to nearly fully recoup that price, according to sources. Most initial bids, however, came in closer to $1.5 billion, one source said.
Last week, Vivendi Uni agreed to sell its non-U.S. publishing assets to French publisher Lagardere for $1.2 billion.
Cash from that sale and a potential deal for Houghton would not be enough to pay for Cegetel, according to analysts. However, sources close to Vivendi Uni have said the firm continues to mull the issuance of new debt and other financing options.
In Paris trading, Vivendi Uni shares ended the day up 6.43%, closing at €13.40 ($13.19). In New York, the conglomerate’s American depository shares rose 4.1% to 12.99.
Joe Ray reported from Paris; Georg Szalai reported from New York.
