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With Sale of NBC, Analysts Say Vivendi Can Pursue Other Acquisitions

PARIS — Selling its stake in NBC Universal will allow Vivendi to shed one of the most important pieces of the legacy of its former chief executive and use the proceeds to search for growth in emerging economies, analysts said Tuesday.

Vivendi, the media and telecommunications company based in Paris, is in the final stages of negotiations to sell its 20 percent stake in the television network and movie studio to General Electric for $5.8 billion.

That would clear the way for G.E. to sell control of the company to Comcast, the largest cable operator in the United States, in a deal that would value NBC Universal at about $30 billion and create, in Comcast, one of the world’s largest media companies.

Vivendi bought Universal in 2000 under Jean-Marie Messier, who led the company through rapid diversification to become the world’s second-largest media group behind what was then AOL Time Warner until its near collapse and his ouster in 2002.

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Jean-Marie Messier, the controversial former chief executive of Vivendi, led the company through rapid diversification.Credit...Natalie Behring/Reuters

“It’s closing a chapter on the previous management,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. “They were happy to get out of a legacy asset. It gives them more money to play with, but they didn’t do it to make an acquisition.”

NBC Universal was created by the merger of NBC and Vivendi Universal in 2004, when G.E. took its 80 percent stake. But the final unwinding of Vivendi’s involvement does not mean the French company has lost its appetite for acquisitions.

Jean-Bernard Lévy, its current chief executive, is using the company’s capital to push into the developing world.

“They don’t want to be left out of emerging markets,” Mr. O’Shea said. “That’s the hot territory.”

In July, talks to acquire the African operations of the Kuwaiti telephone company Zain were halted by Vivendi, which also owns SFR and Maroc Telecom. Last week, the French financial daily Les Échos reported that Vivendi was interested in a stake in Orascom Telecom Algeria.

But in its most intense deal-making this year, Vivendi beat out Telefónica of Spain last month with a cash bid to take a controlling stake in GVT, a Brazilian telecommunications company valued at $4.18 billion. It has since bought millions of additional shares.

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Vivendi executive Jean-Bernard Lévy, left, with Robert C. Wright, then the head of NBC, in May 2004 upon the creation of NBC Universal.Credit...Jeff Christensen/Reuters

“They need to buy growth,” said Alexander Wisch, an analyst at Standard & Poor’s Equity Research in London, “and they’re using cash from G.E. to buy assets where they can generate growth.”

Mr. Wisch saw Vivendi’s actions as a defensive move. As equity markets have risen, and with Comcast expressing interest to G.E., the French company saw an opportunity to sell at a higher price, even if much of that money is already spent.

“Two-thirds of the money from the deal will be spent on an acquisition in Brazil, where they have no experience,” Mr. Wisch said. “They’re overpaying for these assets because Comcast gave them an opportunity.”

At the same time, the $5.8 billion Vivendi is to receive for its stake in NBC Universal could help it pay dividends to its shareholders. The money could also be used to pay 744 million euros ($1.1 billion) to TF1, the French television group, to satisfy a deal announced last week to raise Vivendi’s stake in the pay TV operator Canal Plus France to 75 percent from 65 percent.

That kind of move might be more palatable to stakeholders than diversifying abroad.

“What most investors would like Vivendi to do is concentrate on companies they already own,” said Nick Bell, media analyst at Jefferies in London.

A correction was made on 
Dec. 3, 2009

A picture caption with an article on Wednesday about Vivendi’s pending sale of its share of NBC Universal reversed the identifications of the two men shown. Robert C. Wright, who was head of NBC in 2004, when the picture was taken, was on the right, and Jean-Bernard Lévy, who was then Vivendi’s chief operating officer and is now its chief executive, was on the left.

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A version of this article appears in print on  , Section B, Page 4 of the New York edition with the headline: With Sale of NBC, Analysts Say Vivendi Can Pursue Other Acquisitions. Order Reprints | Today’s Paper | Subscribe

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