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EU OKs Vivendi Purchase of Seagram, Canal Plus

October 14, 2000|From Bloomberg News

BRUSSELS — Vivendi won European Union antitrust clearance to buy Seagram Co. and Canal Plus for $44 billion, on condition that the French media and utility company sell its stake in British Sky Broadcasting Group.

By agreeing to sell within two years its 23% stake in BSkyB, worth as much as $8 billion, Vivendi avoided an extended probe by the EU's antitrust commission.

The purchase of Seagram, owner of the largest music company and the Universal film studio, and all of Canal Plus, Europe's No. 1 pay-TV provider, would make Vivendi a major competitor in the global media market. The new company, Vivendi Universal, would be better able to compete with Walt Disney Co. and a combined America Online Inc.-Time Warner Inc.

"In the global media world, Vivendi Universal is starting as No. 2 behind AOL and Time Warner. It means we've got only one step left in front of us," Vivendi Chairman and Chief Executive Jean-Marie Messier said Friday.

The approval came after much speculation that the European Commission would delay the acquisition by conducting a lengthy review of the transaction.

Without the BSkyB sale, Vivendi would have shared ownership of the pay-TV service with Rupert Murdoch's News Corp., which in turn owns Fox Entertainment Group Inc., one of Universal's rivals, Messier told reporters at a Paris news conference.

"Vivendi Universal's 23% stake [in BSkyB] left it with a minimal position with little influence anyway," said Ed Hatch, an analyst at SG Cowen who has a "strong buy" rating on Seagram shares. "The larger goal is to finish the purchase of Seagram and focus on using Universal's content for Vizzavi," Vivendi's 50-50 Internet venture with Vodafone Group, the world's No. 1 wireless company.

Paris-based Vivendi also agreed to let Internet rivals use Universal music for five years and to limit Canal Plus to acquiring pay-TV rights to no more than half of Universal's film releases, according to the EU.

The agreement is intended to show regulators that Canal Plus won't get special treatment when it comes to Universal films.

Seagram shares rose $3.25 to $57.25 on the New York Stock Exchange.

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