M&A

30 November, 2009

UPDATE 2-GE, Vivendi agree to value NBCU stake at $5.8 bln

* GE, Vivendi agree to deal on NBC Universal stake-source

* GE to pay Vivendi $5.8 bln for stake - source (Adds background on deal, bylines)

By Jui Chakravorty and Anupreeta Das

NEW YORK, Nov 30 (Reuters) - General Electric Co (GE.N) and Vivendi SA (VIV.PA) have agreed in principle to a deal in which GE would buy the French company's 20 percent stake in NBC Universal for $5.8 billion, a source familiar with the matter said on Monday, paving the way for Comcast Corp's (CMCSA.O) proposed joint venture with GE.

The agreement is mainly the result of a meeting between GE Chief Executive Jeffrey Immelt and Vivendi's CEO Jean-Bernard Levy in Paris last week, where the two parties made progress on the talks that had been going on for weeks, the source said.

GE and Comcast declined to comment. A Vivendi spokeswoman did not immediately return a call seeking comment.

Vivendi had originally valued its 20 percent stake in NBC Universal, acquired in 2004, at $6.1 billion, sources told Reuters earlier this month. But the two sides differed on that valuation, slowly narrowing their gap over the past few weeks. GE, which owns the remaining 80 percent, had offered around $5.6 billion about 10 days ago, a source had said then.

The two sides also have differed on when Vivendi would get paid: Vivendi initially wanted the entire payment upfront, while GE wanted to pay after its deal with Comcast closed. On Nov. 20, a source familiar with the negotiations told Reuters that Vivendi had agreed to accept payment for one-third of its stake until the deal with Comcast closes.

The negotiations between Vivendi and GE have been holding up Comcast's plan to form a joint venture with GE by buying a controlling stake in NBC Universal, in what would be the biggest media deal this year. The two sides have valued NBC Universal at about $30 billion.

As part of that proposed deal, NBC Universal would become 51 percent owned by Comcast and 49 percent by GE. Comcast would contribute around $4 billion to $6 billion in cash, as well as its collection of cable networks to pay for its stake.

But for that deal to happen, GE has to buy out Vivendi's stake first. With the tentative agreement between GE and Vivendi, an announcement on the Comcast-GE deal could come in the next few days, two sources familiar with the matter said.

BIGGEST MEDIA DEAL

Under the terms of the proposed deal, the new company 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 agreement. 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 3-1/2-year mark and at a 7-year mark, sources have said.

Comcast has long wanted to buy media assets to create a content powerhouse spanning broadcast TV, cable and film. Chief Executive Brian Roberts said last month he would look at all opportunities in content.

Many of GE's shareholders have urged the conglomerate to offload NBC Universal, whose broadcast and cable networks, movie studio and theme parks are considered misfits among GE's mostly industrial operations. (Reporting by Jui Chakravorty; Additional reporting by Anupreeta Das; Editing by Richard Chang and Carol Bishopric) ((anupreeta.das@thomsonreuters.com; +1 646-223-6224)) ((Click here to see Reuters MediaFile blog))

Source: http://www.reuters.com