Vivendi Shares Plummet on News of Merger Talks With Seagram
Shares in French communications and utility group Vivendi slumped again Thursday as concern grew about an expected three-way merger with Canal Plus and Seagram Co.
Investors were increasingly uneasy over the hefty price tag for Seagram, which is said to be about $33 billion. According to the company, Seagram also has debt of $7 billion, which Vivendi will assume.
“[Chairman] Jean-Marie Messier has eyes bigger than his stomach,” one market-maker said.
Vivendi’s French shares fell 4.9% to 98.45 euros per share in very heavy trading Thursday, after diving 10% on Wednesday. The company’s U.S. over-the-counter shares fell $1.38 to $18.63 on Thursday.
Canal Plus’ French shares fell 1.8% to 200.9 euros Thursday.
But Seagram’s stock continued to rise, up $2.88 to $63 on the New York Stock Exchange.
Analysts said Vivendi’s shares were being punished amid lingering uncertainty over the final structure of the deal, worries it would be dilutive for the French firm and questions about the profitability of some of Seagram’s holdings.
Speaking to reporters Thursday at the Fortune Global Forum in Paris, Messier said talks among the three groups were at an advanced stage, with an all-share deal possible in the coming days.
“There is a Vivendi board meeting next Monday and clearly we will talk about this,” he said. “Whether one board meeting is enough to make a decision on an operation of this size, however, is not clear.”
Messier said a deal with Seagram and Canal Plus would involve the full integration of the three firms and create a powerful, geographically diverse challenger to AOL-Time Warner. “AOL-Time Warner is a U.S.-centric group,” Messier noted. “A combination of Vivendi, Seagram and Canal Plus would be much more balanced,” he said.
Vivendi Environment, the utility unit Vivendi plans to list on the U.S. market this summer, would apparently become a separate unit of the combined group, while Messier indicated Seagram’s beverage business would be sold off.
The Vivendi chief said that Seagram’s film studio holdings were an important part of the deal, but made it clear that he saw the most potential in the firm’s music assets.
The Seagram talks continued to boost other media issues Thursday, including News Corp., up $1.56 to $52.94; Viacom class A, up $4.06 to $70.69; Disney, up $1.25 to $42; Univision, up $3.31 to $106.88; and USA Networks, up $1.50 to $22.75. Seagram is USA’s biggest shareholder.
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Bloomberg News contributed to this report.
