Seagram buys PolyGram from Philips for $10.6bn

SEAGRAM, the Canadian drinks and entertainment powerhouse, has agreed to buy PolyGram from the Dutch electronics giant Philips for $10.6bn in a long-awaited deal that will join some of the music industry's biggest stars under the same roof.

Seagram also said it plans to spin off its Tropicana fruit juice business in a $3.5bn-$4bn deal.

Cor Boonstra, chairman of Philips, will join the Seagram board. Management of Universal Studios, Seagram's music and film division, were scheduled to meet today to identify the management team which will lead the combined group.

Seagram is also looking to sell PolyGram's film division, in which Canal Plus, the French media group, has expressed an interest.

The cash and shares deal, which will create the world's largest music company, values PolyGram at $59 per share. The two companies last week confirmed they were holding discussions following weeks of market speculation. Seagram had previously approached EMI, the British music group, about a possible pounds 5bn deal but failed to agree a price satisfactory to EMI's board.

PolyGram is home to rock superstars like Elton John and U2. Universal, which owns the MCA and Geffen record labels, releases music from artists such as country and western star Reba McEntire. Seagram estimated it will reap $275m to $300m in annual cost savings by integrating the two record labels.

Seagram, which owns Chivas Regal, Absolut Vodka and Grolsch beer, bought 84 per cent of Universal Studios several years ago. In addition to the music business, Universal's assets include the famed movie company, television operations and theme parks.

Seagram said that Universal would acquire Philips' 75 per cent ownership position in PolyGram through a tender offer for all issued shares, including publicly held shares, for $59 per share in cash or, at the shareholders' election, for cash and Seagram common shares.

The agreement in principle calls for Seagram to issue a maximum of approximately 47.9 million common shares (12 per cent of the outstanding shares after the transaction), or approximately $2bn in value.

The Seagram and Philips boards unanimously approved the agreement in principle, and PolyGram's board has recommended the offer to PolyGram shareholders.

The sale of Tropicana Products will be through an initial public offering of common stock. Seagram said it was selling Tropicana as part of its continuing effort to realign its assets as well as to realise the subsidiary's full value for Seagram shareholders.

Edgar Bronfman, Seagram's chief executive, said: "These announcements herald an important transformation of Seagram. We will manage two highly focused businesses of global scope and scale - entertainment and spirits and wine. With the acquisition of PolyGram, we become a global entertainment leader, including the world's largest music company, with a truly impressive roster of musical talent. We're delighted to be buying the world's pre- eminent music company and to be able to integrate it with Universal at an estimated cost saving of $275m-$300m annually."

Mr Bronfman continued: "While we become predominantly an entertainment company as a result of these transactions - we remain as committed as ever to our spirits and wine businesses. "

Frank J Biondi, chairman and chief executive of Universal Studios, said: "The addition of PolyGram to Universal's operations moves us to the forefront of the entertainment industry."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Supporting role: at the Supreme Court, Rhodes was accompanied by a famous friend, the actor Benedict Cumberbatch
booksPianist James Rhodes on the extraordinary legal battle to stop the injunction of his memoirs
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
filmDheepan, film review
Steven Gerrard scores for Liverpool
peopleComedian star of Ed Sullivan Show was mother to Ben Stiller
ebookA unique anthology of reporting and analysis of a crucial period of history
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
George Osborne became Chancellor in 2010
peopleChancellor accused of reneging on pre-election promise
Arts and Entertainment
The pair in their heyday in 1967
Lena Headey plays Cersei Lannister in Game of Thrones
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern