Canal Plus OKs Acquisition by Vivendi

Canal Plus shareholders approved Vivendi’s $9-billion acquisition of Europe’s biggest pay-television company, the last step in the 147-year-old French utility’s make-over into the world’s No. 2 media company.

The vote followed shareholder backing Tuesday of Vivendi’s $30.2-billion purchase of Seagram Co., owner of Universal Music. Both purchases close today, and the company will begin trading as Vivendi Universal on Monday, Vivendi Chief Executive Jean-Marie Messier said.

Messier wants to dominate the Internet market by selling mobile phone and pay-television customers songs and movies from Seagram, and books and CD-ROMs from its Havas publishing unit.

“The hardest part begins now; the new technology has to develop quickly and be accepted by consumers,” said Jacques Falzon, an analyst with KBC Securities France, who has “accumulate” ratings on both Vivendi and Canal Plus shares. “For Canal Plus, their future would have been harder on a stand-alone basis.”

On Friday, the last day of trading in its current form, shares of Canal Plus closed down 3.8%, at 145.6 euros. Vivendi shares rose 0.1%, to 75.2 euros.

Canal Plus gives Vivendi 14 million pay-TV subscriptions across Europe, while Seagram gives Vivendi two media assets: Universal Studios, which is riding high with the top U.S. film, “Dr. Seuss’ How the Grinch Stole Christmas,” and Universal Music, the world’s biggest recorded music company, whose artists include U2 and Luciano Pavarotti.

Vivendi Universal will be the No. 2 media company after America Online Inc. completes its acquisition of Time Warner Inc.

Shareholders of Canal Plus will get two Vivendi Universal shares for each share held in the pay-TV company. They also get to keep their shares in Canal Plus’ French broadcasting unit. Vivendi said each of those shares was worth about 6 euros, or $5.28.

Based on Vivendi’s closing share price Tuesday of 74 euros and company data, the value of the Canal Plus transaction was 10.65 billion euros, or $9.42 billion.

With Canal Plus, Vivendi is getting a company that has lost more than $319 million in the last two years because of costs tied to expansion. A 104-million euros profit for the first half this year stemmed from one-time gains.

To win French regulatory approval to buy the pay-TV company, Vivendi agreed to hand control of Canal Plus’ French subscriber base back to Canal Plus Programmes--a unit that will remain 49%-owned by Vivendi. Still, three French film unions have said they asked a court to overturn the agreement.

Canal Plus said the preliminary vote was 98.6% in favor of the acquisition. On Tuesday, Vivendi said the final tally showed that 96.6% of its shareholders voted to approve the purchases of Seagram and Canal Plus, which is 49% owned by Vivendi.

In Montreal, shareholders owning 293.5 million Seagram shares, or 90.4% of all ballots cast, approved the transaction, which will bring them 0.8 share for each Seagram share, valuing the Canadian company at $23 billion, Messier said. Vivendi also will assume about $7.2 billion of debt, bringing the total price for Seagram to $30.2 billion.