Flotation looms as Vivendi drives a hard bargain in US

WITH waning interest from a dwindling pool of bidders, a stock market flotation is looking increasingly likely for Vivendi Universal's US entertainment arm.

Last week Metro-Goldwyn-Mayer pulled out of the auction, saying the price was too high, and now it appears that another leading contender, John Malone's Liberty Media group, is also losing interest.

If Malone were to pull out, there would be only one formal offer on the table, that of an investor group led by Edgar Bronfman, the former owner of the assets - and even he may not be a starter as it is believed the group cannot come up with the money Vivendi is demanding.

Most of the original bids for VUE came in at about $11 billion or $12 billion.

However, Vivendi has told bidders that it wants to get $14 billion for the entertainment assets, and another $1 billion on top of that for preferred stock owned by Barry Diller whom the bidders would have to buy out.

Sources close to the bidding say that Malone's concerns also centre on price.

Liberty has a lawsuit outstanding against Vivendi accusing it of misrepresenting its finances when it bought USA Networks from Liberty two years ago.

Jean Ren Fourtou, Vivendi's chief, has maintained that a public offering was possible if the auction proved unsatisfactory.

The most serious potential bidder left in the race is NBC, and it is thought a partnership deal may be reached.

(c)2003. Associated Newspapers Ltd.. Provided by ProQuest Information and Learning Company. All rights Reserved.