Royal Philips Electronics has sold its total holding of 32,265,561 shares in Paris-based conglomerate Vivendi Universal. The transaction, which closed yesterday, will provide Philips with proceeds of approximately 720 million euros, and will result in a non-taxable gain of approximately 300 million euros in the fourth quarter. Prior to this transaction, Philips’ holding represented approximately 3 per cent of Vivendi Universal’s outstanding shares. Philips’s share prise rose 1.1 per cent after the announcement, while Vivendi shares fell 0.7 per cent.
The initial combination of the companies was believed to lead to the strengthening of all parties involved, including Philips and its shareholders, by creating a global powerhouse in entertainment and services in the new economy. Philips was a set-top box provider for Vivendi, with whom it supplied to Vivendi’s Canal+ division. Philips has not commented further on why it has sold all of its holdings
Vivendi Universal which began as a French civil engineering enterprise, grew to absorb the Universal entertainment conglomerate in the US and then sold or spun off most of its media acquisitions after investors lost patience over rising debts. Restructuring since 2002 has reduced Vivendi to a much smaller, but significant French film, television and telecommunications operator. The company was expected to drop the ‘Universal’ part of its corporate name in 2003 after a deal that transferred its US film, theme park and cable television interests to a joint venture with NBC-owner General Electric.
In 2001, Vivendi Universal and Sony launched ‘Duet’, an alternative to Napster. The service sported monitoring of what’s downloaded and listened to, better sound quality, a subscription service, and pay-per-listen options. ‘We hope to license 50 per cent of the world’s music’, said a company representative. To kick-start the venture, Vivendi Universal purchased MP3.com for about $350 million, a move that followed Napster’s deal with media conglomerate Bertelsmann. Both deals marked a critical moment of détente and an admission that the labels needed the help of their one-time enemies, as they got serious about online distribution. Unfortunately, that dream failed too.