Vivendi has reached an agreement to buy out partner Lagardere's 20 percent stake in pay-television operator Canal+ France for 1 billion euros, according to Le Monde and Les Echos newspapers. Reacting to the reports, Lagardere said there were ongoing discussions with Vivendi to come to an agreement. A spokesman for Vivendi declined to comment.
If an accord is finalised, it will put an end to a long-running battle between the two French media groups and mean that they essentially meet one another halfway on the price following legal mediation that begin in May. Lagardere valued its stake in Canal+ France at 1.15 billion euros in its accounts, while Vivendi believed it was worth around 800-900 million euros, a person familiar with the situation told Reuters earlier.
Canal+ France is a unit of Canal+, Vivendi's international pay-TV business, which is smaller than British peer BSkyB and News Corp-owned pay-TV operators in Europe. For Vivendi, an accord would rid it of the minority shareholder in Canal+ at a time when pay-TV is set to become a bigger priority. Vivendi is in the midst of a restructuring to pay down debt, shed telecom assets in Morocco and elsewhere and focus on its TV and music businesses.
Canal+ contributed roughly a quarter of Vivendi's sales of 10.84 billion euros in the first half of the year. Those figures are restated to reflect Vivendi's sale of Maroc Telecom and video games maker Activision Blizzard. Vivendi and Lagardere have been in court since February when Lagardere sued Vivendi for 1.6 billion euros ($2.21 billion) in damages over Canal+. It argued that Vivendi makes permanent use of the business's entire cash surplus under a disputed cash management agreement between the venture and its parent company.
They began arbitration in May, which was extended by several weeks in early October to try to reach an accord. UBS analyst Polo Tang, who values Lagardere's Canal+ France stake at 800 million euros, said the accord, if confirmed, was good for Lagardere shareholders because it could lead to further cash returns. "For Vivendi, we see the move as negative," wrote Tang, arguing that Canal+ was a low-growth asset that has been hurt by competition from subscription sports channel BeIn Sport, which is backed by Gulf TV broadcaster Al Jazeera.