Vivendi Said to Buy Berlusconi’s Pay-TV Unit in Swap Deal

  • Agreement may be announced Friday after market close
  • Vivendi, Mediaset CEOs may get seats on each other's boards

Vivendi SA agreed to acquire Mediaset SpA’s pay-TV unit as part of a broader alliance to challenge Rupert Murdoch’s Sky Plc in Europe, according to people familiar with the matter. Mediaset shares were temporarily halted in Milan after rising more than the 5 percent limit.

The Paris-based media company reached an accord with Silvio Berlusconi’s Mediaset that may be announced Friday after a meeting of Mediaset’s board, which is scheduled for 5 p.m. in Milan, said the people, who asked not to be identified since the matter is confidential. Under the proposed deal, Vivendi and Mediaset will acquire stakes of about 3.5 percent in each other, said the people.

Mediaset shares rose 5.4 percent in Milan at 4:28 p.m. after earlier being halted by the 5 percent limit-up rule. Vivendi gained 0.8 percent in Paris.

The stake in Vivendi is valued at about 874 million euros ($994 million). Since Vivendi’s market value is more than six times higher than Mediaset’s, the Italian company will make up the difference by giving Vivendi its 89 percent stake in a pay-TV business called Premium. Telefonica SA of Spain, which owns about 11 percent of Premium, will also sell its stake to Vivendi as part of the accord, possibly for cash, the people said.

Mediaset Chief Executive Officer Pier Silvio Berlusconi may get a seat on Vivendi’s board, and in turn Vivendi CEO Arnaud De Puyfontaine may join Mediaset’s board, the people said.

A spokesman for Milan-based Mediaset and a Vivendi representative declined to comment.

Mediaset, Italy’s biggest commercial TV broadcaster, has considered a sale or a partnership for Mediaset Premium because competition from Sky is hurting subscriber growth in Italy. Silvio Berlusconi, Mediaset’s founder and a former prime minister, is a longtime friend of Vivendi Chairman Vincent Bollore.

Vivendi is executing a plan to build a media group around its French pay-TV station Canal Plus, seeking combinations to expand in video and music and distribution in southern Europe. Bollore has led the company’s push to acquire stakes in Telecom Italia SpA, Italy’s biggest phone carrier, as well as game makers Gameloft SE and Ubisoft Entertainment SA.

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