French Media Giant Gets $5.6-Billion Bid

From Bloomberg News

Generale des Eaux has offered $5.6 billion to buy Havas, France's biggest media company, and Havas Chief Executive Pierre Dauzier has been replaced.

Generale des Eaux, a water and sewerage utility placing increased emphasis on communications, said it would move quickly to cut costs at Havas, the main shareholder of Europe's biggest pay-television company Canal Plus and publisher of weekly news magazine L'Express. Ending the 12-year tenure of Dauzier, who was often criticized for failing to create value at the company, is a positive first step, analysts said.

"If the market judges that an acceleration of Havas refocusing will rapidly lead to value-creation for Generale des Eaux shareholders, the price could remain at above 1,000 francs [about $163], implicitly valuing the bid at 530 francs per share," said Norman Allaire, an analyst at ABN Amro, in a note to investors.

Generale des Eaux said Monday it will offer stock and cash to buy the 70% of Havas it doesn't own.

The acquisition, backed by the board of Havas, will cap Chief Executive Jean-Marie Messier's two-year effort to steer the utility into the faster-growing communications business. Generale des Eaux is expected to push Havas to forge international alliances, building on links with Bertelsmann of Germany, America Online and Time Warner Inc.

"This puts Generale des Eaux at the forefront of the European media industry," said Jean-Marie Legrand, a fund manager at International Capital Gestion, which manages $200 million.

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