Vivendi Backs Away From Buying Italy's Mediaset Premium Outright -- Update
July 26 2016 - 05:17AM
Dow Jones News
By Deborah Ball
MILAN-- Mediaset SpA said Tuesday that French media group
Vivendi SA no longer wishes to acquire all of its pay TV unit,
reversing a decision agreed to in April.
In a statement, Mediaset, which is controlled by the family of
former Italian premier Silvio Berlusconi, said that Vivendi sent
Mediaset a letter Monday stating that it was no longer interested
in taking 100% of Mediaset Premium. Instead, it is proposing to
acquire only 20% of the unit, plus 15% of Mediaset itself in three
years via a convertible bond.
Mediaset said that the Vivendi letter "comes absolutely out of
the blue" and is in "clear contradiction" with the April
agreement.
In a statement, Vivendi said that Chief Executive Arnaud de
Puyfontaine sent a letter to Mediaset's management on June 21
informing the Italian company of "significant differences in the
analysis" of Mediaset Premium's results. Vivendi said it "confirms
its desire to build a major strategic alliance with Mediaset and
Mediaset Premium."
A Vivendi spokesman said that the disagreement between the
French and Italian companies centered on "projections and projected
results," but expressed confidence that the two can find an
agreement.
The news is a setback to Mediaset, which has struggled with its
loss-making pay TV unit for years. In trading in Milan, Mediaset
shares were down 12%.
The two had agreed that Vivendi would take control of Mediaset's
89% stake in Mediaset Premium via a swap of 3.5% stakes in each of
the companies. Vivendi would also buy the remaining 11% stake in
the pay-TV unit from Spain's Telefónica.
While some analysts have valued Mediaset Premium at about EUR900
million ($990 million), the pay-TV division has lost money for
years, struggling to compete with Sky Italia.
"It seems that they're doing the due diligence and they're
getting cold feet about a few different things," said Kepler
analyst Conor O'Shea. "It looked like a crazy deal. If you want to
go to Italy, that's fine, but why take 100% of the losses of
Mediaset Premium?"
The Vivendi-Mediaset deal is an important step in Vivendi's
ambitions to build a pan-European group strong enough to challenge
Netflix and Sky. The agreement also included a deal to work
together on a new streaming service for European audiences.
Mediaset's board will take an official position on the Vivendi
letter when it meets Thursday to approve first-half results.
Write to Deborah Ball at deborah.ball@wsj.com
(END) Dow Jones Newswires
July 26, 2016 05:02 ET (09:02 GMT)
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