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US groups back $15bn bid for Vivendi

Carlyle, Bain Capital and Texas Pacific have reportedly joined forces to back oil billionaire Marvin Davis in his pursuit of Vivendi’s US media assets.

(PrivateEquityCentral.net) The Carlyle Group has reportedly joined fellow private equity powerhouses Bain Capital and Texas Pacific Group to back a $15bn bid by billionaire oil tycoon Marvin Davis for the US entertainment assets of French conglomerate Vivendi Universal.

Spokespersons for Carlyle and Texas Pacific declined to comment other than to say it is very early in the process.

Last November, Vivendi rebuffed an initial $13bn bid for the assets by the same consortium, minus Carlyle.

According to the Los Angeles Times, the architect of the Davis offer, former Seagram Co. chief financial officer and chairman of News Corp.’s Fox Television Brian Mulligan, has secured preliminary commitments from Bank of America, Fleet Boston and Deutsche Bank to provide debt financing to support the acquisition.

According to the New York Times, Davis and Mulligan sent a letter last week to Vivendi's management detailing the alliance's offer.

Davis and Mulligan met last month in Paris with Vivendi's chief executive, Jean-Rene Fourtou, to present their bid and have continued to discuss the matter, the New York Times said.

Davis, chairman of Davis Petroleum, made his fortune drilling for oil and natural gas in the Rocky Mountain West before making a name for himself in real estate, acquiring high profile properties including the Beverly Hills Hotel and the Pebble Beach resort.

Vivendi's board is scheduled to meet on Thursday in Paris to review its plans for its US entertainment assets, which include Universal Studios, music and theme parks, a games division and the USA Networks and Sci-Fi cable channels.

Other prospective bidders include NBC, a unit of General Electric; Metro-Goldwyn-Mayer; Viacom; Rupert Murdoch’s News Corp.; and John Malone’s Liberty Media.

According to the New York Times, Davis’s leading competitor may be Barry Diller, the media mogul who is in charge of Vivendi’s entertainment businesses, which include Diller's cable, film and TV assets that were bought for $11bn in 2001 as part of a program of $77bn in takeovers initiated by then chief executive officer Jean-Marie Messier.

Messier’s strategy led to a record loss for Vivendi in 2001 and ballooning debt. It brought the company close to bankruptcy and led to his being ousted last year and replaced as chief executive officer by Jean-Rene Fourtou.

Private equity firms have been lining up for over a year to take choice slices from Vivendi.

In April last year, UK private equity firm Cinven completed the €1.2bn acquisition of VUP, Vivendi’s business and health press unit. Cinven was the lead partner in a consortium that included Apax Partners and The Carlyle Group.

In August, Axa Private Equity completed its purchase of French construction materials business Bonna Sabla from Vivendi Universal division Vivendi Environnement after the European Union Commission granted its approval. In October last year, Thayer Capital Partners acquired educational software company Sunburst Technology from Houghton Mifflin for an undisclosed sum.

In November, Bain teamed with New York-based Thomas H. Lee & Co. to acquire Vivendi’s publishing company Houghton Mifflin in a E1.8bn buyout. Also in November, Dallas-based Hicks, Muse, Tate & Furst, ARGUS Capital Partners, and the Emerging Markets Partnership Europe Infrastructure Fund acquired Polish cable company Aster City Cable and the cable operating activities of Elektrim Telekomunikacja, which was 51 per cent controlled by Vivendi Telecom, in a E110m buyout.

In January, Vivendi sold its Hungarian telecommunications unit to AIG Global Investment, the private equity arm of insurance company AIG, and UK-based private equity firm GMT Communications Partners for an undisclosed sum.