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Will Vivendi be takeover bait?

U may be in Vodafone sights

NEW YORK — Marvin Davis put Universal in play last week. Now, there’s speculation that Vivendi itself could be a takeover target.

Vodafone may be mulling a bid for the French conglom as the only sure way to get its hands on telecom jewel Cegetel, according to reports out of London Monday. Vodafone reps couldn’t be reached. The U.K. company’s CEO Chris Gent has denied in the past that he’s planning any such move.

U.K.-based Vodafone is one of the largest mobile-phone network companies in the world. Profitable French telecom Cegetel operates a mobile network that would flesh out Vodafone’s European coverage.

Takeover talk was fueled by rumors that Vivendi is considering adopting a so-called poison pill to impede hostile overtures. Shareholders would need to approve such a move, which could be a difficult process.

Pressure is mounting as Vivendi builds up a war chest ahead of a Dec. 10 deadline to take control of Cegetel. Viv U just sold a 22% chunk of its water and waste biz for $1.9 billion –following a $1 billion bond offering and assets sales, including U.S. and European publishing. Against heavy odds, Viv U has rapidly raised the $4 billion it needs to snatch Cegetel from rival Vodafone.

Vivendi and Vodafone are major Cegetel shareholders and both badly want to own it.

Viv U rejected Vodafone’s $6 billion cash offer for its stake, and Vodafone has said it won’t up the ante as a big cash outflow could hurt its credit rating. A Viv U deal would be in stock.

For Vodafone, the idea behind acquiring Viv U would be to sell off all of the latter’s assets but Cegetel. An investor group led by Davis, the former owner of 20th Century Fox, has offered Vivendi about $20 billion for the entertainment biz. Viv U rebuffed the offer but said it will revisit the issue early next year.

Analysts Stateside said such a bid, while not impossible, is highly unlikely. Vivendi is worth about $32 billion — a big chunk of change. It’s also struggling under some $19 billion in debt. Many investors wish the company would take the cash for Cegetel to pay off debt and repair its finances.

Andrew O’Neill of Sanford Bernstein said a Vivendi-owned Cegetel would still need to buy products and services from Vodafone — and noted that Vodafone would have the right of first refusal if Vivendi wanted to sell it down the line. “If they don’t get it now, maybe two years from now,” he said. He doesn’t think investors would appreciate Gent’s “doing something swashbuckling” on the acquisition front — including a hostile takeover of Viv U.

Vivendi is set to announce its latest quarterly financial results today.

The company’s shares have been on a roll lately. They rose 2.51% Monday to $14.70 in New York. Vodafone fell 2.89% to $19.50.

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