Vivendi Universal is doing its best to incite a multi-billion dollar bidding war for its entertainment properties.
Following Tuesday’s two-hour board meeting in Paris, Viv U took Univeral Music Group off the table and told some suitors they will need to raise their price in order to guarantee a seat in the second round.
Viv U said the VUE sale process was “proceeding at a sustained rate, marked by keen competition between the candidates.” Viv U sources also indicated that it would prefer to hold onto the Universal Music Group until it can fetch a higher valuation. Banking sources suggested that bids for UMG came in at around $4 billion-$5 billion.
Marvin Davis, the oil magnate and one-time proprietor of 20th Century Fox, along with financial mastermind Brian Mulligan, were the first to make a play for Viv U’s U.S. entertainment assets back in November last year. But the private, equity-backed team’s most recent offer was nixed Tuesday as being “too low,” Paris sources said.
Sources close to the Davis camp said that Viv U told them to come back with a higher price if they wanted a pass into the second round. That price is rumored to be in the vicinity of $11.5 billion, making MGM the closest, at a reported offer of $11.2 billion.
Also working against the Davis bid may be its insistence on purchasing the music division. Edgar Bronfman Jr., whose own private equity-backed bid survived the first cut, evidently has been told to reformulate his bid without UMG.
The bidders, in addition to the Davis group and Bronfman are: John Malone’s Liberty Media, NBC, MGM and Viacom, which evidently lodged an offer for only the cable networks plus TV production assets — lending weight to the thesis that some of the contenders could team up in order to snag assets including Universal Studios, TV channels and theme parks. At this stage, however, NBC is denying any imminent interest in tying up with rival bidders like MGM or Liberty.
Sources close to Viv U’s bankers said the goal now is to get Liberty in particular up to at least MGM’s level and to try to convince Viacom to extend its offer to include theme parks and the film studios.
So many second-round candidates decreases the likelihood of a speedy sale — despite the view that Vivendi Universal may be looking to firm things up as early as the end of this month or the beginning of August.
Vivendi also took the opportunity to remind investors, and no doubt bidders, that it has handily met its mid-year targets for raising cash and lowering debt.