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Vivendi gets Cegetel, stock falls
PARIS, France (CNN) -- Vivendi Universal's stock fell sharply after the world's second-largest media company won a battle to take control of France's second largest phone company Cegetel. Some investors believe Cegetel should have been sold off and Vivendi Universal shares fell 3.4 percent, or 0.52 euros, to 15.10 euros in early Paris trading on Wednesday. On Tuesday CEO Jean-Rene Fourtou said the group was not wedded to keeping both its telecoms and entertainment assets long-term. Ousted CEO Jean Marie Messier spent billions buying U.S. media assets, hoping to sell films, music and Internet services over mobile phones. But the strategy failed to win over investors. Debt has mounted and stock has fallen by about 75 percent this year.
"There is no reason, in the long-term, to keep both (media and telecom)," Fourtou said, adding that Vivendi had no plans in the coming year to shed either business. Fourtou said Vivendi might consider the gradual spin-off of the U.S. entertainment assets under the Universal brand, a move favoured by Vivendi Universal Entertainment co-CEO Barry Diller. Vivendi dismissed a recent $20 billion offer for those assets but Fourtou said he would still consider all options. Fourtou's comments came as Vivendi's board agreed to spend four billion euros ($4 billion) for BT Group's 26 percent stake in Cegetel. That move scuppered Vodafone's attempt to fill in a gap in its European mobile phone empire. Vodafone, Europe's biggest mobile phone company, had made a similar offer to BT, Britain's dominant phone company, but Vivendi had an agreement with BT that allowed it to match any offer for its stake in Cegetel. The acquisition boosts Vivendi's stake in Cegetel to 70 percent. But Vivendi is selling other assets to get back on its feet after teetering close to collapse. "Investors wanted Vivendi to sort out its problems as soon as possible and many believed the best way to do that was to sell its Cegetel stake. However, this is not a disastrous outcome," one London-based fund manager told Reuters. For the time being, Vivendi is focusing on its mobile phone business Cegetel, French pay television operator Canal Plus and U.S. entertainment assets including Hollywood's Universal Studios. Vodafone said it would work with Vivendi and push on with its agreed deal to buy a 15 percent stake in Cegetel held by U.S. communications company SBC. This would leave Vodafone and Vivendi as joint shareholders, with 30 percent and 70 percent, respectively. "I talked to (Vodafone CEO) Chris Gent, and we agreed that now the competition is over, we will listen to each other and cooperate," Fourtou said. Under the terms of the shareholder agreement, Vodafone was not allowed to come back with a higher offer.
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