The Telegraph
Since 1st March, 1999
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Vivendi in deal to sell French assets

New York, Oct. 23: Vivendi Universal has agreed to sell its French publishing business and other non-American assets to Lagardere, the French conglomerate that publishes Elle and Car and Driver magazines, for about $ 1.2 billion in cash, executives involved in the negotiations said Tuesday night.

The decision by Vivendiís board to sell a part of its publishing unit instead of the entire division, which includes the educational publisher Houghton Mifflin, is another setback in Vivendiís effort to pay down its $ 18.6 billion debt load.

Vivendi decided to sell its French publishing assets like LíExpress and other non-American assets separately because bids for the entire publishing unit all came in under $ 2.9 billion, the executives said, far below the $ 4 billion the company had anticipated receiving.

Vivendi plans to announce the deal with Lagardere on Wednesday. The transaction could face regulatory opposition as independent publishers in France have already complained that such a deal could create a monopoly in the French publishing industry.

Vivendi now plans to sell Houghton Mifflin separately in the hopes that bidders will place a higher valuation on the business that it is not attached to the other assets. It was unclear how soon Vivendi will try to sell Houghton Mifflin.

Whatever happens, Vivendi needs cash quickly. Besides paying down its debt, the company must find a way to counter an offer by the Vodafone Group for its stake in Cegetel, the large French phone company. Hoping to take advantage of Vivendiís weak cash position, Vodafone reached an agreement last week to increase its stake in Cegetel to 56 per cent by paying 6.3 billion euros ($ 6.2 billion) in cash for the 26 per cent of Cegetel held by the BT Group and the 15 per cent owned by SBC Communications.

Vivendi can still block Vodafoneís transaction. Under the terms of its shareholding pact with BT, Vivendi can override Vodafoneís offer simply by matching it. Under its agreement with SBC, its counter-offer must exceed Vodafoneís bid by 13 per cent. Vivendi has until November 10 to match the offer, or lose control of Cegetel.

Vodafone also offered to buy the remaining 44 per cent stake, held by Vivendi, for 6.8 billion euros ($ 6.7 billion).

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