Sunday, December 18, 2011

GE, Vivendi Move Closer to NBC Deal

General Electric (GE) and French telecommunications company Vivendi(VIVDY) are inching back toward a deal for GE to buy Vivendi’s 20% stake in NBC Universal, sources say. The movement comes a week after talks between the two sides seemed near collapse, with the sides at one point being as much as $1 billion apart. GE needs to buy the minority stake in order to complete its planned sale of its NBC Universal media assets to cable giant Comcast. (CMCSA).

A source with knowledge of the talks say the two sides resumed pointed negotiations over the Thanksgiving weekend and hope to have an agreement announced this week, but in no case later than Dec. 10. That’s when Vivendi’s annual window for selling the stake back to GE expires. The source says that the two sides narrowed their differences to less than $500 million and are now pointing toward an agreement around $5.4 billion, although that number still appears fluid. These sources ay the deal could still fall apart altogether, although they are more optimistic than they have been in weeks.

GE had initially offered $5 billion for the stake, which Vivendi has held since selling an 80% stake in the Universal film studio and theme park to GE in 2004. The industrial giant’s tentative agreement with Comcast to merge GE’s media assets with the cable company’s cable channels had valued the combined company at roughly $30 billion, which would have indicated a price tag for Vivendi's 20% stake at just under a $6 billion, including NBC debt.

GE had offered less than that amount, however, thinking that Vivendi couldn’t fetch as much as it planned in an IPO. Under its agreement with Vivendi, GE can also preempt any planned IPO of the shares by buying them at a price to be determined by a third party.

Vivendi had valued its NBC stake at $6.3 billion in a June 30 securities filing, but the value had fallen closer to $6 billion. As part of any agreement with GE, the French company is believed to have insisted upon ? and gotten ? an agreement from the U.S. conglomerate to pay for part of its stake before the deal closes to guarantee against a lengthy regulatory review that might delay the deal’s closing.

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