Nov. 23 (Bloomberg) -- General Electric Co. is leaning toward allowing an initial public offering of Vivendi SA’s minority holding in NBC Universal as talks to purchase the stake stall, a person with knowledge of the situation said.

The two sides are about $500 million apart on a valuation for Vivendi’s 20 percent stake in the entertainment unit, and little progress has been made in recent days, said the person, who declined to be named because discussions are private. GE, which owns the remaining 80 percent of NBC Universal, may still agree to buy out Vivendi if talks advance, the person said.

An IPO may force GE to adjust its plans to create a joint venture combining NBC Universal’s film, cable-television and theme-park properties with networks owned by Comcast Corp., the largest U.S. cable operator. Vivendi, which says it wants to sell, can also choose to keep its investment in NBC Universal.

“GE wants to get this deal done very badly. They’re now exposed because having started down this road, GE has admitted to the market that NBC Universal isn’t a core asset and they want to get rid of it,” said Porter Bibb, managing partner at Mediatech Capital Partners LLC. “They don’t want it to come back and be stuck with it; they will make this deal happen.”

GE is committed to forming the venture with Comcast, the person said. Comcast would initially own 51 percent and may eventually acquire full ownership.

Any change in ownership of New York-based NBC Universal depends on Vivendi formally deciding to sell during an annual window that opened on Nov. 15 and runs through Dec. 10 each year through 2016. GE has the right of first refusal, allowing the company to negotiate a purchase of the NBC Universal stake, or it can allow an IPO to proceed.

‘Run, Not Walk’

Comcast and Fairfield, Connecticut-based GE value NBC Universal as it exists now at about $30 billion, people familiar with the discussions said this month. That implies a valuation of $6 billion for the Vivendi stake.

“An IPO would be a disaster because the market knows it’s not worth even the $6 billion that’s on the table right now, people would run, not walk, away from that stock,” Bibb said of Vivendi.

Shares of GE rose 43 cents, or 2.8 percent, to $16.03 at 4:15 p.m. in New York Stock Exchange Composite trading, while Comcast rose 8 cents to $15.09 on the Nasdaq Stock Market. Vivendi rose 23 cents to 19.24 euros in Paris.

Vivendi Visit

GE and Comcast haven’t commented publicly on their discussions. GE spokeswoman Anne Eisele declined to comment today, as did Vivendi spokeswoman Flavie Lemarchand-Wood and Comcast spokeswoman D’Arcy Rudnay.

Jeffrey Immelt, GE’s chairman and chief executive officer, will be in France this week on a previously planned business trip and Vivendi has been added to the meeting schedule, said a person familiar with the plans. GE doesn’t publicly release Immelt’s schedule.

Vivendi can sell shares for as much as $4 billion in the market each year if the Paris-based company decides to exit the partnership and GE doesn’t pre-empt a sale, according to the original 2004 agreement between the companies. Under certain conditions, Vivendi can exercise a put option to GE, according to Vivendi’s annual report for that year.

Vivendi would like to sell its stake, Chief Financial Officer Philippe Capron said on Nov. 19. Vivendi’s NBC Universal stake is valued on the company’s 2008 balance sheet at about 4.3 billion euros ($6.4 billion).

“We are not interested in staying on board a new GE- Comcast ownership of NBCU, so yes, we would exit,” Capron said at a conference in Barcelona. “This year the situation is a bit more complex. We are not forced to do anything. We could just also say no.”

IPO Contingency

If GE were to create the joint venture with Comcast, the cable operator would gain cable channels USA, CNBC, MSNBC and Bravo. Comcast also would get the NBC television network and Universal film studio, helping its push into programming.

Immelt said last month he is studying “all the options” for NBC Universal.

“We’ve done all the planning to see if an IPO would be fine,” Immelt said Oct. 21 in San Francisco, referring to an IPO of NBC Universal. “You’ve got to think a couple years ahead in the space and ask: ‘Might there be partnerships to run the company in a better way?’ In this case, we’ve got all the options.”

GE, the world’s biggest maker of power generation equipment, jet engines and medical imaging machines, has health care, finance, energy and aviation operations in France, with more than 10,000 employees in the country. GE Energy Infrastructure, another unit, this month bid for French government-owned Areva SA’s transmission and distribution unit.

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net

Last Updated: November 23, 2009 17:24 EST