Advertisement

Davis Ready to Make a New Offer to Vivendi

January 18, 2003|Richard Verrier | Times Staff Writer

Dismissing critics who have called him a "tire kicker," billionaire oil man Marvin Davis is about to take another spin at buying the U.S. entertainment businesses of Vivendi Universal.

Davis' representatives say he has secured the financing to buy the businesses -- which include Universal's Hollywood studio, as well as its theme parks, television properties and the world's largest music company -- and is laying the groundwork for another round of talks at Vivendi's Paris headquarters at the end of the month.

"Mr. Davis is hopeful that he'll be able to consummate the transaction this trip," a Davis spokesman said Friday.

It may not be so easy, however. An investment group headed by Davis in November offered to buy the Universal properties for $20 billion or pay $13 billion for a controlling stake. Vivendi rebuffed the initial offer as too low.

Former Seagram Co. Chief Financial Officer Brian Mulligan, the man considered the architect behind the takeover proposal, has been quietly meeting with bankers in New York and Los Angeles in the last week to prepare for the Paris meetings.

Although sources close to Vivendi say Chief Executive Jean-Rene Fourtou is taking Davis' offer seriously, differences over price could be the main sticking point.

Vivendi spokeswoman Anita Larsen declined to comment.

The talks also could lead to a showdown between Davis and longtime nemesis Barry Diller, the co-chief of Vivendi's U.S. entertainment arm.

The men are old foes from their days at the 20th Century Fox studio, which Davis owned in the early 1980s. Tensions have resurfaced of late as Davis has questioned Diller's ability to juggle his role at Vivendi and his job as head of USA Interactive Inc., a sprawling electronic commerce company. Davis also has made it clear that he would oust Diller if his bid were to succeed.

Diller has fired back, dismissing Davis' offer as not serious and calling him "fat" at an investment conference. Diller later apologized for the remark.

Diller is said to be preparing his own plans for the future of the U.S. assets. Those include a possible spinoff of the Universal assets into a separate company, a portion of which would be sold to the public and the rest owned by private investors including Vivendi and Liberty Media Corp.'s John Malone. There has been widespread speculation that Diller would head such an operation, although Diller has said he wants to focus on his e-commerce businesses.

Which way Vivendi will ultimately go remains unclear. Its executives believe that Davis' earlier offer for the entertainment assets was well below what they are worth, company sources said. Davis values the overall entertainment operation at about $20 billion and has offered to buy about a 65% stake in it.

That bid consists of assuming $7 billion in debt, paying $4 billion in cash and offering $2 billion in preferred stock, sources said. Vivendi, however, believes the assets are worth closer to $35 billion, while industry analysts put the figure at $26 billion.

Davis previously identified his partners in the bid as Bain Capital and Texas Pacific Group. However, he and his representatives declined to elaborate on exactly how the deal might be financed.

Separately, in an effort to raise cash to further lower its debt, Vivendi is considering a public offering or outright sale of its games division, possibly to Microsoft Corp., sources said. The unit could fetch about $1.5 billion, some close to Vivendi suggest. Microsoft couldn't be reached for comment.

Advertisement
Los Angeles Times Articles
|
|
|