VU on last page of Houghton deal
November 1, 2002 - The Hollywood Reporter
Vivendi Universal has entered exclusive talks to sell Boston-based educational publisher Houghton Mifflin to a consortium of private equity firms for €1.75 billion ($1.73 billion) in cash and debt, Vivendi said Thursday.
The consortium, which is led by New York-based Blackstone Group and includes peers Thomas H. Lee Partners, Bain Capital and Apax Partners, has been in the running for Houghton for weeks and beat out two other groups of bidders.
Sources close to the situation said a formal acquisition deal was not in place yet but is expected to come together within days. “This should be a done deal within the next week or earlier,” one source said.
Another source said the price tag was a figure the two sides were working with, but was not final. Similarly, that source indicated that the buyer consortium could still see a late addition, potentially in the form of a member from a rival bidder.
“Nothing is fully set in stone,” one person close to the negotiations said.
Spokesmen for Vivendi and Blackstone declined to comment on the expected timing, the exact figures of cash and debt likely to be involved in the deal or further details.
The other groups in the running for Houghton were a group led by private equity firm Carlyle and a group made up of U.S. publisher John Wiley & Sons and private equity firm Ripplewood Holdings.
Calls to reps at John Wiley, Ripplewood and Carlyle were not returned at press time.
The Houghton sale would give Vivendi, which has €19 billion ($18.8 billion) in debt, some much-needed breathing room and latitude to put together financing to gain control of French telecom giant Cegetel.
On Tuesday, Vivendi snubbed British telecom firm Vodafone’s €6.77 billion ($6.65 billion) cash bid for its 44% share in Cegetel at a board meeting. Vodafone has since said it will not raise the bid, which officially lapsed on Thursday.
Sources say Vivendi has looked into ways to use the Houghton proceeds and €1.25 billion ($1.22 billion) it recently got from Lagardere for its non-U.S. publishing assets in combination with potential loans to buy control of Cegetel. The company is focused on matching Vodafone’s €4 billion ($3.95 billion) offer for British Telecom’s 26% stake in Cegetel.
According to the Cegetel shareholder agreement, Vivendi would win the stake as long as it at least matches Vodafone’s offer.
Vodafone, a 15% Cegetel shareholder, has bid on BT’s 26% share and SBC Communications’ 15% share earlier in the month in offers totaling €6.3 billion ($6.2 billion). On Monday, however, Vivendi won a court battle giving it an extra month — until Dec. 10 — to make a counter-offer on one or both stakes.
Vivendi bought Houghton last year under the reign of former CEO and chairman Jean-Marie Messier for $1.7 billion and the assumption of $500 million in debt.
Besides the finalization of the Houghton transaction and the resolution of the Cegetel ownership issue, Vivendi will deal mostly with smaller asset sales in the coming months, according to a spokeswoman. Vivendi executives have indicated that the sale of an art collection and real estate holdings, including a New York apartment previously used by Messier, will take place soon.
For the first quarter of next year, Vivendi is considering a previously hinted-at initial public offer of its video games unit, according to sources. A spokeswoman declined comment. However, the company has previously indicated an IPO could come in the first half of next year but will depend on market conditions.
In Paris trading, Vivendi shares closed up 0.32% to €12.40 ($12.26). The stock market had closed by the time Vivendi released its latest Houghton update. In New York, American depository shares of Vivendi fell 2.2% to 12.12.
Joe Ray reported from Paris; Georg Szalai reported from New York.
