Vivendi Buys Out TV Division From Lagardere for $1.4 Billion

Vivendi SA agreed to buy out Canal Plus France from Lagardere SCA for 1.02 billion euros ($1.4 billion), putting an end to years of disagreement over the pay-TV unit’s ownership structure.

The cash transaction for the 20 percent holding in Canal Plus France, mediated by a commercial court in Paris, will terminate all disputes between the two companies, Vivendi and Lagardere said yesterday. Lagardere and Canal Plus will continue to pursue cooperation in program production and the publishing and distribution of TV channels, they said.

By buying out France’s biggest pay-TV company, Vivendi would resolve “a rather troublesome relationship” and boost its earnings per share 5 percent, Liberum Capital analysts wrote in a note. The agreement also removes an uncertainly as Vivendi examines how its assets -- Canal Plus, record label Universal Music Group and Brazilian Internet unit GVT -- could be structured as the Paris-based company disposes of telecommunications assets.

Lagardere walked away from negotiations with Vivendi in 2011, saying it may sell the stake through an initial public offering instead after failing to agree on its valuation.

Vivendi rose 0.4 percent to 18.79 euros at 9:11 a.m. in Paris, giving the company a market value of 25.2 billion euros. Lagardere climbed 1 percent to 26.27 euros, giving it a market value of 3.4 billion euros.

Activision Stake

In February, Lagardere sued Vivendi, demanding restitution of 1.6 billion euros to Canal Plus France. Vivendi contested the claim. In its suit, Lagardere, also based in Paris, said that a cash-management accord between Canal Plus France and parent Canal Plus Group isn’t valid because it wasn’t approved by the supervisory board. Vivendi owns 100 percent of Canal Plus Group.

Vivendi, whose biggest shareholder is French billionaire Vincent Bollore, is overhauling its structure to boost its market valuation. It sold a stake in video-game maker Activision Blizzard Inc. in an $8.2 billion deal this year and is looking to divest its majority holding in Maroc Telecom SA. It’s also evaluating a possible IPO for the SFR French mobile-phone division.

Before it's here, it's on the Bloomberg Terminal.