Diller, Vivendi Reach Agreement

Barry Diller has made up with Vivendi Universal, ending a nasty transatlantic feud that threatened to delay one of the biggest media deals in years.

The French conglomerate Wednesday announced that it had reached an agreement with Diller’s InterActiveCorp to void certain restrictions his company held over the Universal movie, theme parks and TV assets being sold to NBC.

The agreement clears the last remaining hurdle to NBC’s acquisition of the Universal businesses, which is set to close next month.

NBC’s parent, General Electric Co., had made removing the covenants a condition of closing, fearing Diller could use them to thwart NBC’s plans for everything from the lucrative “Law & Order” TV franchise to the future of the theme parks.

Diller negotiated the covenants when he sold his USA entertainment assets to Vivendi in 2002.

The complex deal made Diller chairman of the joint venture, Vivendi Universal Entertainment, and gave his company a minority stake.

In exchange for dropping its covenants, InterActive will receive letters of credit valued at about $2 billion to cover the value of its preferred shares in Vivendi Universal Entertainment, sources said.

The announcement came a day after the Federal Trade Commission said it would not oppose the combination with NBC and days before a scheduled court hearing between Vivendi and InterActive.

Vivendi had sued InterActive in March, claiming Diller was standing in the way of the NBC deal to gain leverage in a separate tax dispute.

On Wednesday, Vivendi said it would dismiss the lawsuit after the deal closed and the letters of credit were issued.

Diller declined to comment.

NBC is paying Vivendi $3.8 billion in cash and is assuming $1.7 billion of Vivendi’s debt in the deal.