HITS Daily Double


$11.5 Billion Ultimatum Rejected as Asset Auction Continues
Two days after the Kirk Kerkorian-controlled MGM threw down an ultimatum on Vivendi Universal in the bidding for the latter’s non-music entertainment assets, VU has brushed it aside, according to several published reports.

MGM had offered to raise its initial $11.2 billion bid—already said to have been the most cash-heavy of the lot—by $300 million to $11.5 billion, but only if it was given additional details on Vivendi Universal Entertainment’s broadcast carriage agreements and other information relating to its Universal Pictures film arm by 5 PM Monday (7/21). Otherwise, the film conglom said in a letter to VU earlier this week, it would pull its bid.

The Vivendi board was apparently not impressed by the MGM threat and has dismissed the increased bid as too low. Reports also indicate that the VU board is determined to control the pace of the sale and won’t respond to undue pressure from bidders.

Now that its ultimatum has been rejected, it remains to be seen if MGM will indeed walk. Some expect the company to remain at the table with the other bidders, which include Liberty Media, NBC owner General Electric, Viacom and a consortium led by Edgar Bronfman Jr.

Because of its bid’s large cash component, MGM has been seen as a leading bidder. VU is selling VUE, which includes the Universal Studios film and television properties, USA and Sci Fi cable channels and Universal’s theme parks division, for the purpose of debt reduction.

Bidder due diligence is said to be continuing this week, after which Vivendi may narrow the field further.