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Vivendi pulls plug on water unit
PARIS, France -- Vivendi Universal is pulling the plug on its 150-year-old water business, saying it plans to sell its stake in the unit amid speculation it will use the cash to counter Vodafone's offer for French telecom operator Cegetel. The world's No. 2 media group said it is lining up a "limited number" of buyers for half of its 40 percent holding in Vivendi Environnement, with options to buy the remaining shares by December 21, 2004. "After the exercise of the call options, Vivendi Universal will no longer hold any shares in Vivendi Environnement," the company said in a statement late on Thursday. The company did not put a value on the proposed asset sale. Vivendi also said it had finalised the sale of its U.S. educational book unit, Houghton Mifflin, for 1.7 billion euros ($1.7 billion) -- about 500 million euros less than what it originally paid for it -- to Thomas H. Lee Partners and Bain Capital Inc. Last month, the group raised 1.25 billion euros from the sale of its non-U.S. publishing assets. Together with asset sales already announced and others still to be completed, Vivendi expects to raise 7 billion euros by the end of 2002 -- up from a previous target of 5 billion euros. Vivendi said it also expects to surpass its asset sales target of 12 billion euros by the end of next year. By the end of 2004, the company said asset sales should total 16 billion euros. Chief Executive Jean-Rene Fourtou announced the aggressive asset sales programme in September in an effort to pay down the group's 19 billion euro debt load -- built up during a two-year buying spree by Jean-Marie Messier, who was ousted from the top job in July. The recent deals should provide Vivendi with the needed cash to battle Vodafone, Europe's biggest mobile phone operator, for control of their profitable venture Cegetel, which also runs France's second largest mobile network SFR. Vivendi, the second largest media company after CNN's parent AOL Time Warner, is in talks with Belgian telecom group Belgacom on a jointly financed bid for Cegetel. Vivendi has rejected a 6.77 billion euro offer from Vodafone for its 44 percent stake in Cegetel and has until December 10 to match a 4 billion euro Vodafone bid for BT Group 26 percent. Vodafone currently has a 15 percent stake in Cegetel. Neither group wants to lose out on Cegetel's 1.3 billion euro annual cashflow and its access to the lucrative French telecoms markets. "If Vivendi can raise money to do it, then it would be a good idea to buy more of Cegetel. Our analysis shows Vodafone was underpaying," Neil Blackley, an analyst at Merrill Lynch, told Reuters. "However Vodafone would now be justified to increase its bid by as much as 15 percent." Vivendi (PEX) shares were up 4.2 percent to 13.55 euros in mid-morning trading in Paris on Friday, while Vodafone (VOD) was down 4.6 percent to 98.15 pence in London.
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