|
EU to extend Vivendi probe?
|
 |
October 13, 2000: 10:34 p.m. ET
French firm's late bid for Seagram purchase faces likely delay
|
LONDON (CNNfn) - Vivendi SA representatives made a last-ditch appeal to antitrust officials in Brussels Thursday to try to persuade the European Union not to extend its scrutiny of the French firm's planned $34 billion purchase of Seagram Co. Ltd. for up to four months more.
A source close to the matter had told CNNfn.com Wednesday that the EU's Competition Commission, whose Merger Task Force is looking into the matter, was expected to decide to undertake a second round of investigations. Such a  move would come as a shock to investors, who mostly expected the combination to get a green light by the end of this week.
Officials are seeking to clarify concerns that the combined company would dominate the European music and film industries.
Antoine Lefort, a spokesman for French media-to-water company Vivendi, said on Thursday the company "has no specific impression" that approval for its purchase of the Canadian entertainment and drinks company will be delayed. Seagram spokeswoman Anita Larson declined to comment.
However, a person close to the situation said "the issues are limited and manageable."
The Commission declined to comment on speculation Vivendi had agreed to sell its 20 percent stake in Britain's No. 1 pay-TV broadcaster BSkyB, owned by Rupert Murdoch's News Corp. Ltd., to get a green light on Friday.
Seagram stock fell almost 5 percent to close at $54 in New York Thursday, while Vivendi (PEX) fell  2 to 84 in Paris.
The European Commission, the executive arm of the European Union, last month pushed back its deadline to decide if the merger warrants an extended, four-month antitrust investigation to Oct. 13 from Oct. 2.
Seagram (VO: Research, Estimates) and Vivendi had earlier tried to head off any extended merger investigation by pledging the combined company would not discriminate in favor of Seagram-produced music on Vivendi's Vizzavi mobile-phone Internet service. In addition, Seagram's Universal  Studios said it would end its exclusive alliance for the production of French and Spanish films with Vivendi's pay-TV unit Canal Plus SA (PAN).
One source with knowledge of the Commission's thinking said its concerns centered on the combined company's film businesses, although he declined to provide further details. The merger would unite the movie studios connected to Canal Plus with Seagram's Universal Pictures.
French newspaper Le Monde reported Thursday in its online edition that the competition commission was not satisfied about Vivendi's promise, made last Friday, that Canal Plus's pay-TV networks would not have exclusive or automatic access to Universal Pictures films. The newspaper said that barring a surprise development, the Commission would open a four-month inquiry into the deal.
Until Wednesday, "Everybody believed that it was going to go through smoothly," said an attorney for arbitrageurs who were betting on the deal's successful completion, speaking on condition of anonymity.
Vivendi is also planning to take full ownership of Canal Plus, Europe's biggest pay-TV operator, which it already controls with a 49 percent stake. That would bring the total tab that Vivendi is paying to $51 billion, based on stock prices at the time the three-way combination was announced in June.
'Late in the day'
"It is indeed very late in the day for concessions," said Wilko van Weeld, an antitrust lawyer with Brussels law firm Stanbrook & Hooper. As a matter of course, he said, EU officials typically seek reactions to new developments from applicants' rivals and suppliers.
"They send out letters to competitors so that they can raise objections," said van Weeld - which means eleventh-hour concessions could stall the process.
Competitors that might have the most to lose from the mega-merger are smaller media companies. Their concerns are that a vertically integrated Vivendi Universal will be able to control the flow of content through the cable, Internet and satellite distribution channels on which smaller players also are relying. A vertically integrated company is one that has media content - publishing, television programming, music and film, for example - in addition to the means of distributing it.
The EU's official stance Thursday continued to be that it hadn't formally decided whether to call for a longer merger investigation.
Reiterating the previous day's comment by EU Competition Commissioner Mario Monti, his spokeswoman Amelia Torres told Reuters: "Until the end of the commission's review of this particular merger, all options are open and that includes, of course, first-phase approval or going into a (second-stage) investigation."
Briefing for analysts
Meanwhile, Vivendi said Thursday that it, Canal Plus and Seagram were holding an analysts' meeting in Paris to highlight the strategic rationale of the merger, which would create a media titan named Vivendi Universal. The meeting is expected to continue on Friday.
"We felt we owed our shareholders and the financial analysts an in-depth presentation of the key components and growth potential of the new company," Seagram Chairman and Chief Executive Officer Edgar Bronfman Jr. said in a statement. Bronfman is set to be the vice chairman of Vivendi Universal.
The company resulting from the tie-up would rank as the world's second-biggest media company, assuming the proposed acquisition of Time Warner Inc. (TWX: Research, Estimates) by America Online Inc. (AOL: Research, Estimates) wins U.S. regulatory approval. The European Commission on Wednesday gave its go-ahead for the $125 billion purchase.
Vivendi Universal would unite Vivendi's telecommunications systems and publishing interests; Seagram's Universal Music - the world's biggest music company - and Universal Pictures movie studio and television operations; and Canal Plus's activities in pay-TV and film production.
Jean-Marie Messier, Vivendi's youthful chairman and chief executive officer, said Thursday the new company would have combined pro forma revenue of about 24.6 billion ($21.4 billion). The largest chunk of that - 6.6 billion - would come from its music business.
U.S., Canadian and French regulators have already approved the merger, one of many among media companies in recent times, as players seek to make their mark as different methods of distributing information and entertainment evolve. 
|
|
|
|
|
|
Vivendi
Seagram
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
