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Vivendi in Deal to Sell Houghton

November 01, 2002|Corie Brown | Times Staff Writer

Vivendi Universal announced Thursday that it has agreed to sell its U.S. publishing division, Houghton Mifflin Co., to a group of equity investors led by Blackstone Group for $1.7 billion in cash and assumed debt.

The deal is part of an effort to slash the Paris-based company's $19 billion in debt so it can focus on developing its core Los Angeles-headquartered entertainment assets: Universal Studios, Universal Theme Parks and Universal Music Group.

Separately, Blackstone is talking with Vivendi about increasing the New York buyout firm's stake in Universal's theme parks. The company currently owns 50% of Universal's two Orlando, Fla., theme parks. Universal also operates parks in the Universal City, Spain and Japan.

Vivendi's financial problems are the result of former Chief Executive Jean-Marie Messier's three-year spending spree to transform the venerable French water and sewer company into an international media powerhouse. French prosecutors have opened an investigation into shareholder allegations of financial wrongdoing by Messier, who has denied any improprieties.

Vivendi bought Boston-based Houghton last year for $2.2 billion. Although the sale price values the publishing company well below what Vivendi paid for it, Sanford C. Bernstein & Co. analyst Michael Nathanson said, "Anytime Vivendi can sell an asset, it is a good deal for them."

A spokesman for Blackstone confirmed that the company is in an investment consortium with Thomas H. Lee Partners, Apax Partners and Bain Capital to buy Houghton.

Dismissing speculation that Blackstone intends to sell Houghton's educational publishing unit separately from the division that publishes J.R.R. Tolkien's "Lord of the Rings" and the "Curious George" series of children's books, the spokesman said, "When we make investments, it is for the long term."

Vivendi fell 27 cents to $12.12 on the New York Stock Exchange. It has lost about 80% of its market value this year.

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