The so-called auction of Vivendi Universal is turning into a slumber party.
The French board members emerged from their much-anticipated four-hour Paris meeting Tuesday with “news” that it will continue talking to two bidders. To be sure, they are the only bidders left: NBC and Edgar Bronfman Jr.
“They’ve had a huge volume of documents to sift through,” said a company source after the board decided to prolong the agony for at least another two weeks.
In a statement following the meeting, Viv U did its best to commend its remaining contestants, noting that both offers include “industrial and financial aspects, (debt deconsolidation and cash or cash equivalents).”
The company also said it would be maintaining “a substantial minority interest in a U.S. media corporation with excellent growth potential.”
Viv U added that it continues to explore an IPO for VUE, “after the implementation of strategic alliances aimed at strengthening its television activities (such as the joint channels proposed with Comcast).”
Negotiations and further fine-tuning of the offers will likely continue and accelerate this week and next — no doubt with continued squabbles over information access and clarity — as board members mull their options.
Hopes that Viv U chairman and CEO Jean Rene Fourtou would be ready to extend exclusive rights to one party were dashed early Tuesday when it became obvious that neither bidder could yet sway the board to make a final decision.
In a clear play for negotiating advantage, the French tried to intimate that the Bronfman team’s latest cash push was just tempting enough to gamble for a bit more from both bidders.
“Ten days ago, NBC was the clear choice but the situation has changed,” explained a source close to the negotiations who was in full spin mode.
“The board today reasons that if Bronfman could come back with a better offer once, he could do it again. The group therefore has no reason at this point to enter exclusive negotiations.”
Such tactics could backfire, however.
Despite NBC claims to be at ease with the process so far, the Peacock is adept at playing hardball too. NBC concedes that its most recent offer is still only a broad-strokes proposal until it finishes due diligence.
Neither NBC nor Bronfman is likely to alter the basic economic terms of their deals at this stage. NBC is apparently still insisting on key data from Universal that could sway the valuation of its proposed joint venture by several hundred million dollars.
Edgar could exit
Team Bronfman, increasingly frustrated by the delays after it submitted a firm offer, could opt to exit rather than simply continue being used to keep pressure on NBC.
A source in Paris said Tuesday that to extend exclusive talks to NBC would at this stage require a “financial gesture.” That could mean some kind of cancellation fee that would be payable to Viv U should a deal not be consummated.
Bronfman’s proposal commits more upfront cash — some $6.5 billion in cash plus $2 billion in debt assumption.
However, Viv U may be concerned that the deal could have trouble closing because it relies on several private equity firms that typically don’t commit funds until the final hour of exclusive due diligence.
NBC’s offer apparently contains equity that could be monetized quickly, in an amount sufficient to meet Viv U’s year-end debt reduction targets.
GE’s hard-nosed negotiating team may still be seeking more detailed information from Universal on film studio and library deals. Meetings between GE and Viv U will likely continue over the next two weeks to examine issues.
NBC would not comment on the deal components or status.
Gauls not galled
While Viv U’s meandering approach to the VUE disposal has had the U.S. business community gnashing its teeth, the French are more tolerant of Fourtou’s methods.
A senior French banking source told Variety Tuesday: “The French financial community is waiting to see if Fourtou can deliver what he promised by the end of this year — 7 billion euros in debt reduction and a return to investment grade for Viv U’s stock. Concrete results are what matters, not how he achieves them.”
“There obviously has to be a compromise between cash and value and what is important now is that things move forward.”
The source added: “Bluffing your adversary is part of the game, especially in the media business where there are lots of strong personalities involved. They are gamblers who like to manipulate. I don’t see this going very differently from other media deals we’ve seen in the past in Europe and Asia.”