Vivendi Spurns Davis; Diller, Malone Lurk

Author:
Publish date:
Updated on

Vivendi Universal has rejected a $20 billion unsolicited offer for its
Vivendi Universal Entertainment assets from Texas billionaire Marvin Davis,
which could have the effect of putting those assets into play.

News that Davis -- the former head of the 20th Century Fox film
studio, who made billions of dollars in the oil industry -- made the bid
surfaced in several media reports this week. Davis, in a press release,
confirmed that he has made an offer.

Davis' offer would involve about $15 billion in cash and the assumption of $5
billion in debt.

In the statement, Davis said his group has met with several senior Vivendi
executives in Paris, and they have been invited back to continue the discussions
after the first of the year.

"We believe our proposal provides full and fair value for the assets, and
VU's response has been positive," he added in the statement.

But Vivendi shot back later with its own take on the matter.

In a prepared statement, Vivendi confirmed that its general management had
met with Davis' representatives Nov. 5 and discussed VUE. While Vivendi's board
of directors was informed of the proposal, the company said its general
management then informed Davis and his representatives that "an
entertainment-asset sale was not on the agenda."

Whether VUE is on the block or not, Davis' offer has put the media giant in
play. VUE includes all of Vivendi Universal's U.S.-based entertainment assets,
including its Universal Studios movie studio and theme parks, Universal Music
Group and cable networks USA Network, Sci Fi Channel and Trio.

In his press release, Davis said a deal could be hammered out in three to
four months. He added that if he were to acquire the assets, he would bring on
former Universal Studios executive Brian Mulligan to run the company. Current
Universal Studios head Ron Meyer and Universal Music Group CEO Doug Morris would
keep their jobs.

Conspicuously absent, however, was current VUE chairman Barry Diller, who has
a long history with Davis. Davis hired Diller away from Paramount Studios in
1984 to run 20th Century Fox, but the two soon butted heads. Davis
sold the studio to News Corp. in 1985.

Diller is also expected to launch his own bid for VUE.

Speculation is that Diller is speaking with Liberty Media Corp. chairman John
Malone about combining VUE with Liberty's Starz Encore Group LLC premium-movie
channels, then spinning off the assets in a public offering of stock.

Even if Diller doesn't launch a bid for VUE, he could still come out a
winner. As part of the $11 billion deal struck last year to sell his cable
networks to Vivendi -- which created VUE -- Vivendi could be forced to pay
Diller's USA Interactive Inc. up to $2 billion in tax liabilities should certain
assets be sold.

In addition, Diller personally owns a 1.5 percent stake in VUE, which is
worth at least $275 million.

Related