Vivendi and Lagardere agree 1 bln euro Canal+ buyout

Reuters

* Vivendi agrees to buy Lagardere's 20 pct stake in Canal+France

* Deal ends long-running battle between the companies

PARIS, Oct 28 (Reuters) - Vivendi has reached anagreement to buy out partner Lagardere's 20 percentstake in pay-television operator Canal+ France for 1.02 billioneuros ($1.41 billion), the companies said on Monday.

The accord puts an end to a long-running battle between thetwo French media groups, having finally met halfway on priceafter legal mediation that began in May.

Lagardere valued its stake in Canal+ France at 1.15 billioneuros in its accounts, while Vivendi believed it was worth800-900 million euros, a source familiar with the situation toldReuters.

"This agreement, which will be submitted for information tothe appropriate works councils, puts an end to all disputesbetween the two groups related to this participation," thecompanies said in a joint statement.

Canal+ France is a unit of Canal+, Vivendi's internationalpay-TV business, which is smaller than British peer BSkyB and News Corp-owned pay-TV operators in Europe.

For Vivendi, the deal rids it of a minority shareholder inCanal+ at a time when pay-TV is set to become a bigger priority.Vivendi is in the midst of a restructuring to pay down debt,shed telecoms assets in Morocco and elsewhere and focus on itsTV and music businesses.

Canal+ contributed roughly a quarter of Vivendi's sales of10.84 billion euros in the first half of the year. Those figuresare restated to reflect Vivendi's sale of Maroc Telecom and video games maker Activision Blizzard.

Vivendi and Lagardere have been in court since February,when Lagardere sued Vivendi for 1.6 billion euros in damagesover Canal+. It argued that Vivendi made permanent use of thebusiness's entire cash surplus under a disputed cash managementagreement between the venture and its parent company.

They began arbitration in May, which was extended by severalweeks in early October to try to reach an accord.

UBS analyst Polo Tang, who valued Lagardere's Canal+ Francestake at 800 million euros, said before the accord was announcedthat it would be good for Lagardere shareholders because itcould lead to further cash returns.

Tang added that Canal+ was a low-growth asset that had beenhurt by competition from subscription sports channel BeIn Sport,which is backed by Gulf TV broadcaster Al Jazeera.

The acquisition would also reduce shareholder returns forVivendi from the previously expected 4 billion euros to 3billion euros, UBS said.

Vivendi has not yet indicated how much of the proceeds ofthe Maroc Telecom and Activision sales it will return toshareholders.

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