Vivendi Universal sells publishing arm for £736m

The embattled French media group Vivendi Universal chipped away at its debt mountain yesterday with the €1.2bn (£736m) sale of its professional publishing arm to a consortium of venture capitalists.

The deal, which was agreed last summer but for the price, will cut Vivendi's €19bn media debts by €1bn. It comes at a critical time for Vivendi, whose chief executive Jean-Marie Messier, is facing mounting shareholder pressure over the collapse in the company's fortunes.

The business, which publishes more than 70 business and health related titles, was sold as a leveraged buyout – the largest to date in France – led by Cinven, Carlyle and Apax Partners.

The initial price set last summer at about €2bn was slashed in the wake of 11 September and the media sector's re-rating. Vivendi, which will receive an immediate payment of €1.2bn, followed by deferred payments linked to the business' future profitability, agreed to retain a 25 per cent stake in an effort to close the deal.

Cinven said that the private equity partners will set up two companies to run the magazines separately, which include trade magazines published in France, Italy and Spain and healthcare publications, half of which are in the US.

Separately, Mr Messier, who ousted the head of the company's Canal Plus pay-TV business earlier this week in an attempt to reassert his authority, told French regulators that the station would continue to fund French cinema.

This followed a public outcry involving Lionel Jospin, the French Prime Minister, and President Jacques Chirac, in response to the dismissal of Pierre Lescure. The former Canal Plus boss fell out with Mr Messier over strategy for the station, which has racked up five years of losses, including a £500m loss last year.

Analysts said that selling the publishing business made strategic sense because it would free up Vivendi to focus on its global businesses, which span from Hollywood's Universal Studios to the Connex railways, which owns British railway franchises.

Vivendi has been under pressure because of a failure to deliver a convincing strategy and manage its debt pile. It reported the largest-ever loss in French corporate history last month of €13.6bn.