20 November, 2009
UPDATE 4-GE, Vivendi make progress on NBC Universal
* GE to pay Vivendi 1/3 value of stake as interim payment
* Two sides are $500 mln-$1 bln apart on stake valuation
* Vivendi values NBC stake at $6.1 bln
* Vivendi's OK needed before Comcast deal can progress
(Adds details on Vivendi-GE talks, changes dateline, byline)
By Jui Chakravorty and Anupreeta Das
NEW YORK, Nov 20 (Reuters) - General Electric and Vivendi
are moving closer to a deal on NBC Universal, with Vivendi
agreeing to accept payment for just one-third of its stake
until a related deal with Comcast closes, according to a source
familiar with the situation.
Talks between Vivendi SA (VIV.PA) and General Electric Co
(GE.N) have been holding up Comcast Corp's (CMCSA.O) plan to
buy a controlling stake in NBCU. Vivendi has to agree to sell
its 20 percent stake to GE before the Comcast deal, which would
be the biggest in media this year, can progress.
While Vivendi and GE have not agreed on a price yet, the
French media company's acceptance of a staggered payment
schedule shows it is willing to compromise to pave the way for
Comcast, the largest U.S cable service provider.
Vivendi had previously asked to be paid fully upfront to
avoid regulatory risk -- U.S. antitrust enforcers are expected
to take at least a year to scrutinize the Comcast-NBCU deal.
Vivendi values its stake in NBCU, acquired in 2004, at $6.1
billion, according to sources familiar with the situation. One
said GE's latest offer is about $500 million lower, while two
people described the gap as less than $1 billion.
Comcast, which has long coveted owning media content, has
been in talks for months with GE, which owns 80 percent of NBCU
and has been under pressure from some shareholders to divest
its media business.
The plan is for GE to sell Comcast 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 companies have agreed to value NBC Universal at
about $30 billion, sources previously told Reuters. But for
that deal to happen, GE has to buy out Vivendi's stake first.
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.
Vivendi 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.
Differences in valuation and when Vivendi should get paid
have slowed the talks, the sources said, dampening hopes of GE
and Comcast announcing a deal before the U.S. Thanksgiving
holiday next Thursday.
"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.
NBC declined to comment while Vivendi did not return calls
seeking comment.
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 Dominique Vidalon in Paris and
Georgina Prodhan and Quentin Webb in London; editing by
Matthew Lewis, Tiffany Wu and Andre Grenon)
Source: http://www.reuters.com
UPDATE 4-GE, Vivendi make progress on NBC Universal Added: (20.11.2009)
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