Almost in the books
Lagardere gets OK for Viv U's pub assets
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Speaking in London, Arun Sarin, CEO of giant U.K. telecom group Vodafone, declined to rule out a possible takeover of Vivendi to gain control of the two companies' lucrative cellular phone joint venture, Cegetel.
Vivendi shares rose on the comments, closing up 1% to $23.32 in New York.
"This is not our first preference, this is not our second preference.... (But) I can't sit here and say to you that we are willing to rule that option out," Sarin said during a briefing at the Foreign Press Assn. in London.
"We're clearly willing to pay a fair price for that company," he said, according to a report from Reuters, referring to Cegetel parent SFR. "Whenever the time is right, whenever the situation is right, we would like to get these two companies together."
Vivendi owns 56% of Cegetel and Vodafone owns 44%. The companies insist relations are good. But last year they locked horns when debt-laden Vivendi refused to sell its chunk to Vodafone, opting instead to fork out more than $4 billion to buy a controlling stake for itself.
A takeover would muddy the waters for Universal Music Group and French pay TV group Canal Plus, two Vivendi assets that Vodafone wouldn't be likely to keep. The recent fight for Warner Music demonstrated ample interest in buying into the music biz at the low point of a global sales slump. Some UMG execs are said to be exploring the possibility of a management buyout.
Vivendi, meanwhile, continues to shed assets. European competition commissioner Mario Monti will ask for approval for the controversial publishing sale to Lagardere in the next few weeks, a spokesman said, on the condition that the scale of the deal be reduced.
Lagardere confirmed that it has agreed to acquire a smaller chunk of the business, now dubbed Editis, than it had sought.
Gallic company wanted to snag operations accounting for 60%-65% of Editis' revenues and keep its distribution outfit, but Brussels nixed this. To get the deal approved, it has agreed to make do with assets that add up to about 40% of revenue and half of the company's profits, and to relinquish its distribution platform, CEO Arnaud Lagardere said Wednesday.
The concession follows loud protests from the French publishing industry, which is worried the deal would give the powerful Lagardere Group a stranglehold on the sector.
The Brussels-based European Consumers' Organization also had argued against Lagardere, which owns the publishing group Hachette, as the deal would give Lagardere 50% of the French-language book market in Europe as well as 80% of the educational and paperback novel markets in France.
Best shot
Arnaud Lagardere was philosophical about the sacrifice, saying at a press conference Wednesday, "We did everything we could."
In France the affair is seen as a vital test for Lagardere after the death of his empire-building father, Jean-Luc, in March.
Lagardere pere had been the architect of the deal, even positioning himself as the defender of French culture to ward off the sale of the publishing assets to a foreign investor.
Some in France think the son could have played his cards better with Brussels. "The way Arnaud Lagardere overcomes this affair will condition his future and that of the group that bears his name," the Daily Le Figaro opined Wednesday.
Despite the reduced size of the merger, it would still create the largest book publisher in France. Editis is held in trust by bank Natexis Banques Populaire pending European Union approval.
(Andy Stern in Brussels contributed to this report.)
