Vodafone Planning Takeover Bid for Vivendi ?

Vivendi Universal is looking like a takeover bid target following notification it received from Vodafone that the company is giving six months notice of the termination of the agreement not to invest in Vivendi. The agreement will now expire at the end of January next year. The agreement was signed in January 2000 as part of the deal to set up their joint venture mobile content venture, Vizzavi. The agreement prevented Vodafone from acquiring Vivendi shares directly or indirectly, alone or in conjunction with other parties.

This standstill clause, originally covering a period of three years and later increased to four, offered the possibility of termination by Vodafone with six months' notice.

Vivendi now looks like a likely bid target from Vodafone next year. The company could launch a hostile bid for Vivendi, and then sell off the non-mobile assets to gain control of SFR. France is one of the few European markets where Vodafone does not have a controlling interest. As Vivendi is currently in the middle of an asset disposal program to cut its debt, Vodafone would probably find it moderatly easy to sell off the unwanted assets as much of the due-diligence will have been completed by Vivendi itself.

Vodafone recently lost a battle with Vivendi for control of the French GSM network, SFR after Vivendi exercised an option to buy British Telecom's 26% stake in Cegetel, which gives it 70% control of the company. Cegetel itself controls 80% of the GSM network, SFR - hence Vivendi now has an effective 56.1% controlling interest in the network.

Vodafone itself controls the remaining 43.9% of SFR though direct and indirect shareholdings. Vodafone has already secured the funds for an outright purchase of Cegetel, so raising the funds for a takeover of Vivendi should not prove too difficult."

Posted to the site on 28th July 2003