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Vivendi-Seagram-Canal Plus: 3 way merger ensuing |
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News |
June 21, 2000
PARIS (AP) - The chairman of French utilities and media conglomerate Vivendi SA on Tuesday confirmed plans for a dlrs 34 billion merger with Canadian drinks and entertainment giant Seagram Co. and Vivendi's own pay-television unit, Canal Plus.
The merger, which had been expected, will combine Seagram's film production and music interests with Vivendi's European cable TV, satellite and Internet distribution systems to create a new group to be called Vivendi Universal that will be based in Paris.
The new company will create a powerful international entertainment group that will rival to AOL-Time Warner, the world leader in the field. It will offer movies, TV programming, music sports, games and educational and professional information via digital and analog formats, a communiqué said.
Jean-Marie Messier told France's Europe-1 radio that he wanted "to make the Internet swing" with the deal.
A communiqué said that company would initially have combined revenues of dlrs 55 billion, according to a Vivendi communiqué.
Messiers the company would have no debt and confirmed plans to sell off Seagram's dlrs 7 billion to dlrs 8 billion drinks business, which he said were non-strategic assets. He also said he would float about 30 percent of Vivendi Environment, the company's utilities arm.
The goal of the merger was to create a "single, integrated" media company. Messier said he wanted Seagram for its world-famous Universal Studios, which will give it access to the U.S. market and give him a missing piece in his own empire - namely music.
"For the first time in Europe, there is a communication group of a size that will be able to rival all the American giants," Messier said.
The deal will be an all-stock swap, valued at dlrs 34 billion, or dlrs 77.35 per Seagram share, the communiqué said.
"It fulfills a number of needs for both companies," said Dennis McAlpine, a media and entertainment analyst at Ryan, Beck & Co. "It gives the Bronfman family a graceful way out of the entertainment business, and it gives Vivendi an American platform."
The markets have not reacted well to the proposed merger. Vivendi's stock has slipped since last week when news of the impending fusion emerged, but Messier brushed off the reaction as simply "speculators playing with stock."
Vivendi stocks were down 6.6 percent Tuesday on the CAC-40, while Canal Plus traded down 7.7 percent before trading was temporarily suspended.
The three companies were to officially announce the merger later Tuesday morning.
Once just a nationalized water company, Messier has transformed the firm into a global media giant with classy headquarters just off the Arc de Triomphe in Paris, one of the French capital's most prestigious addresses.
Vivendi operates in over 100 countries with 260,000 employees.
The deal is likely to lead to a shakeup at Canal Plus, the French pay-television company in which Vivendi has a 49 percent stake. Vivendi is expected to buy out the 51 percent of Canal Plus that it does not already own and spin off the TV activities to avoid conflict with French government rules on ownership of domestic TV channels.
Messier said he had spoken with French President Jacques Chirac and Prime Minister Lionel Jospin about the deal.
Messier was named chairman of the group. Seagram head Edgar Bronfman Jr. will be vice chairman with responsibility for music and all Internet activities, according to the Vivendi communiqué.
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