The European Media group Vivendi Universal yesterday struck a deal to transfer its 21 per cent stake in BSkyB to Deutsche Bank in a move designed to satisfy European regulators.
Last October, the European Commission ordered Vivendi to dispose of its BSkyB shareholding within two years as a condition of winning approval for its purchase of Canada's Seagram.
Vivendi, which yesterday entered into a highly complex "monetisation" agreement with Deutsche Bank, is confident the move will be enough to satisfy the regulator.
Under the terms of the deal, Deutsche Bank has loaned Vivendi 4.2bn euros (£2.6bn) over a four-year period, for which the BSkyB shares are effectively held as collateral.
For Vivendi, it means the BSkyB stake will be removed from its balance sheet, enabling it to meet regulatory requirements, although it will retain financial exposure to fluctuations in BSkyB's share price.
The company will also book a profit in 2001 for an amount dependant on the BSkyB share price at the end of the year. At a price of 650p a share, the profit would be in the order of 2.6bn euros, it said. Shares in BSkyB closed up 17p at 617p yesterday.
Vivendi, which can sell the BSkyB shares with Deutsche Bank's agreement at any point over the four-year period, said it would use the loan to reduce debt as well as finance the buyback of some of its own shares.
While Deutsche Bank has "beneficial ownership" of the shares, it does not technically own the stock and therefore has no exposure to any movements in BSkyB's share price. Unless Deutsche Bank transfers the stock to another group, it will own the shares after four years.
The move came as Vivendi said that despite general market uncertainties, it would meet its profit and sales targets for this year.
Vivendi said it would achieve its goal of boosting earnings before interest, tax, depreciation and amortisation by 35 per cent this year and revenues by at least 10 per cent.
Jean-Marie Messier, chairman and chief executive, said: "Should the recent tragedy [US terrorist attacks] result in a further period of uncertainty and maybe recession, Vivendi Universal will continue to deliver growth and will benefit from strong defensive qualities."
In the first-half, the company recorded net income of 22m euros after goodwill amortisation charges. Pre-tax profits before exceptional items were up 51 per cent to 1.42bn euros.
Separately, Vizzavi, the 50:50 mobile internet portal venture between Vivendi and mobile phone operator Vodafone, denied reports it was about to cut jobs among its 800-strong workforce. The company, which said it was hiring more permanent staff while letting consultants' contracts expire, pointed out that its shareholders had affirmed their commitment to the group at a meeting last week and that the business was rolling out ahead of target.Reuse content