Vivendi Universal: In a Strategic Flux

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On a Buying and Selling Spree Contd...

An attempted merger between Rupert Murdoch's News Corporation and Canal Plus failed due to disagreement between Murdoch and Messier over the control of the unified company. The year 2000 saw the company entering into a landmark deal: Messier announced a £ 66 billion6 merger between Canal Plus, Vivendi and the music, movies, spirits & wine major Seagram. Seagram owned the Universal Entertainment conglomerate (including TV, film production and distribution, theme parks, multimedia and books) and the PolyGram music empire.7 The new media giant thus created was named Vivendi Universal. Headquartered in Paris with a branch office in New York, it included the world's largest music company, the second largest film library, the second largest theme park company, a major film production studio and major book publishing interests. This merger made Messier the head of the world's second largest media group. He was applauded in the global business world for having created Europe's 'answer' to the US media giant, AOL Time Warner.

In 2000, the company acquired a 35% stake in the Moroccan Telecommunications company, Maroc Telecom. VU also entered into a 50-50 joint venture with UK's Vodafone, the world's largest wireless carrier. The aim of the venture was to develop a European internet portal called Vizzavi that would work on wireless devices, digital TVs and personal computers (PCs). This deal gave VU access to 48 million subscribers across Europe. During the same year, VU sold the spirits and wines business (of Seagram) to Diageo and Pernod Ricard for US $ 8.1 billion and partially sold its construction and civil engineering operations.

In 2001, Messier restructured the company. VU was divided into two broad business units: Media and Communications, and Environmental Services. The Media and Communications business was again divided into five business segments: Music, Publishing, TV and Film, Telecommunication and Internet. (Refer Table II for details). The environmental services division, named Vivendi Environment (VE), had four main activities: Vivendi water, Dalkia (energy business), Onyx (waste management) and Connex (transport). VU owned 63% of VE. VE and VU became listed on the French and US stock exchanges in 2000-2001.

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6] April 2003 exchange rate: $ 1.59506 = 1 £.

7] While Universal had been bought by Seagram from Japan's Matsushita, PolyGram had been bought from Philips in 1998.