Founding family regains control of company

PARIS — Vivendi Universal confirmed it has reached a preliminary agreement to cede its majority stake in Gallic film group UGC to its founders, the Verrechia family.

The agreement, while small potatoes compared to Viv U’s announcement Tuesday of its multibillion-dollar merger with NBC, ends Viv U’s struggle to extricate itself from the tangled deal negotiated by former topper Jean-Marie Messier.

Messier’s deal allowed the Verrechias to retain control of the group, including blocking rights to any sale by Viv U, as well as a punishing put option that the Verrechias could exercise at any time to force Viv U to buy their 19.7% stake above market price.

Under the new accord, according to Gallic daily Le Figaro, no money will change hands: Viv U will own 80% of the UGC group and will immediately cede half of that stake to the Verrechias in exchange for the annulment of the put option.

This will leave Viv U with a 40% stake in UGC and will allow it to erase 350 million euros ($379.5 million) of debt it carries as the majority shareholder and $86.7 million for the put option from its off-balance-sheet business.

The put option has long been an albatross around Viv U’s neck. In May the group was rumored to have received bids from two private equity houses for its stake in UGC. However, the put option significantly reduced the amount of coin Viv U could have tapped in a sale.

Now Viv U will be able to command a better price for its 40% stake, and may have more room to negotiate with bidders.

UGC would be a nice prize for a potential buyer, with 850 movie screens across six countries and a 50% stake in France’s leading distrib UFD, a joint venture with Fox.

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