Vivendi Universal S.A.'s moves to possibly acquire a larger stake in USA
Networks Inc. could have an impact on USA's pending purchase of online travel
service Expedia Inc. (www.expedia.com).
Expedia said Wednesday that a USA-Vivendi deal may require it to file amended
proxy materials with the Securities and Exchange Commission, thus holding up a
planned Dec. 17 shareholder vote on Expedia's merger with USA.
In the statement, Expedia said it would conduct its Dec.
17 shareholders meeting as planned and 'will transact any other business as may
properly come before the annual meeting including, to the extent a USA/Vivendi
transaction has not been announced and is
considered not probable, approval of the USA/Expedia merger transaction.'
In July, USA said it would buy a 75-percent stake in Expedia from Microsoft
Corp. in a deal valued at about $1.5 billion.
On Tuesday, Vivendi acknowledged it has talked with USA Networks about a
possible transaction, but disputed key elements of a published report that put
it close to a $13- to $18-billion buyout of USA's entertainment assets,
including its cable networks.
Vivendi has openly coveted such TV properties as USA Network, Sci Fi Channel
and Studios USA. Vivendi owns about 41 percent of Barry Diller's USA Networks,
but Diller controls the company, so Vivendi needs to buy him out or otherwise
accommodate his interests.
Any deal also would need to pass muster with John Malone's Liberty Media
Corp., which owns about 21 percent of USA and has veto power over certain big
transactions.
Seagram Co. Ltd. sold out to Vivendi in 2000, but merged the USA content
assets with Diller's company, then called HSN Inc., two years before that.
At an investors conference in October, Vivendi chairman Jean-Marie Messier
talked about Vivendi's not getting market-valuation credit for its USA assets
because Vivendi can't consolidate USA's results into its own.
'We have to find a way to allow this consolidation someday,' Messier
said.
On Tuesday, the New York Post reported Vivendi was 'about to' wrap up
such a deal soon - one that valued the USA entertainment assets at $13 to $18
billion.
In a statement Tuesday, Vivendi confirmed talks that it said might or might
not lead to a transaction. But it said the figures in the article were 'totally
absurd - even the lowest part of any range.'
'In any case,' Vivendi added, 'those discussions will not result in creation
of any new Vivendi Universal shares and all contemplated scenarios under review
would result only in a limited amount of cash exit for the company. Any
transaction under review would result in accretion for Vivendi Universal
shareholders.'
The statement concluded: 'Our first priority is to take advantage of the
synergies of movie/TV production and distribution.'
USA officials could not be reached for comment.
A research note from Salomon Smith Barney on Tuesday said USA's content
assets could be 'reasonably valued' at $10 to $12 billion - $8 billion in
returned USA stock and $2 to $4 billion in cash - implying a valuation of 17 to
20 times estimated 2002 cash flow of $600 million.
USA's other assets include HSN and
Ticketmaster.
