20 November, 2009
UPDATE 3-Vivendi stake sale in NBCU hinges on price, timing
* GE, Vivendi under $1 bln apart on NBCU stake valuation
* Vivendi values NBC stake at $6.1 bln
* Disagreement holds up Comcast-GE NBCU joint venture
(Recasts, adds financial details, adds LONDON to dateline pvs
NEW YORK/PARIS)
By Jui Chakravorty and Quentin Webb
NEW YORK/LONDON, Nov 20 (Reuters) - General Electric Co
(GE.N) and Vivendi SA (VIV.PA) disagree on a valuation for the
French company's 20 percent stake in NBC Universal, and a
further drag on the deal is that Vivendi wants the payment
upfront, while GE prefers to wait until its deal with Comcast
Corp closes, sources familiar with the matter told Reuters.
GE and Vivendi are less than $1 billion apart in valuing
Vivendi's stake, the sources said. Vivendi values its stake at
$6.1 billion, one of the sources said.
GE, which owns the remaining 80 percent stake in NBC
Universal, has been in talks with Comcast (CMCSA.O) to sell it
a 51 percent stake in a proposed joint venture. Comcast would
contribute its cable networks and $4 billion to $6 billion in
cash to the venture.
The two parties have agreed to value NBC Universal at about
$30 billion, sources previously told Reuters.
But for that GE-Comcast deal to happen, GE has to buy out
Vivendi's stake first. The two have been in talks as Vivendi
has been trying to negotiate the best deal for itself.
The talks have been going slow, sources said, dampening
hopes of GE and Comcast announcing a deal before Thanksgiving.
NBC declined to comment while Vivendi did not return calls
seeking comment.
PUT OPTION
Every year between November and December, Vivendi has to
decide whether to exercise its "put" option to sell its stake.
It could also demand an initial public offering for NBC
Universal instead, putting it in a strong bargaining position
if GE and Comcast are in a hurry to get the deal done.
This year, Vivendi is eager to dispose of its stake, which
it acquired as part of a 2004 deal to create NBC Universal,
sources have said.
Vivendi, which owns the world's biggest recorded music
company, Universal Music Group, as well as telecoms assets,
acquired Brazilian telecoms group GVT (GVTT3.SA) in a $4.8
billion deal last week.
"Following the GVT deal, we believe Vivendi will ultimately
sell its stake in NBCU, but not at any price ... Similarly, GE
needs Vivendi's stake for Comcast for the tie up to go through
and we see a compromise as likely," UBS wrote in a note.
Although Vivendi has said it will tap available credit
lines of 6 billion euros ($8.9 billion) for the acquisition and
does not need to sell the NBCU stake, it has also said it hopes
to grow in the telecoms sector in emerging markets. It could
use the cash for further acquisitions.
"There seems a good deal of posturing on all sides," Citi
analysts wrote in a note on Friday, adding they valued
Vivendi's stake at $5.9 billion.
"Vivendi's liquidity rights (right to force an IPO at some
point) may well be unappealing to Comcast as a potential
majority owner of NBCU over time. As such, we think that
Vivendi's leverage in negotiations will be reasonably strong,"
the analysts wrote.
NEW COMPANY
GE and Comcast have ironed out all their issues and are now
waiting for GE and Vivendi to reach a resolution, sources said.
Neither side is expected to walk away, the sources said, but
the hold-up makes the timing of a deal unclear.
The proposed joint venture is expected to be able generate
cash to pay down $9 billion in debt that would be added to its
books as part of the deal. It would use that debt to buy the
rest of the company from GE.
GE has negotiated a redemption option that would give it
the right to redeem all or part of its stake in the new company
in exchange for cash at the three-and-a-half year mark and at a
seven-year mark, sources have said.
The terms of the deal allow Comcast's cash payment to be
determined partly by NBC Universal's financial performance. If
the unit's performance worsens between the signing of the deal
and the closing, Comcast could end up paying less, sources
previously told Reuters.
(Additional reporting by Anupreeta Das in New York, Dominique
Vidalon in Paris and Georgina Prodhan in London, Editing by
Sitaraman Shankar and Matthew Lewis)
Source: http://www.reuters.com
UPDATE 3-Vivendi stake sale in NBCU hinges on price, timing Added: (20.11.2009)
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