French publisher Lagardere unveiled a deal with Vivendi Universal today whereby Lagardere could spend about €2 billion to boost its television presence.
Under the deal, Lagardere will become a key shareholder of Canal Plus France, the new pay-TV entity to be formed from the merger of Vivendi's Canal Plus unit and rival TPS.
The move follows a $540 million deal for Lagardere to buy the books division of Time Warner, and some observers wondered whether magazine and books publisher Lagardere may have to reduce its stake in defence and aerospace group EADS.
But a source close to Lagardere played down this suggestion. Canal Plus and TPS together have more than 8.5 million subscribers in France, Europe's second largest pay-TV market behind Britain.
"The goal is to have finalised all the operations by the end of the third quarter 2006," Vivendi Universal Chief Executive Jean-Bernard Levy told a conference call.
Under the two-stage, deal Lagardere will buy an initial 20 per cent stake in the new Canal Plus France by transferring its 34 per cent holding in CanalSat, the satellite broadcasting arm of Canal Plus, and by buying additional shares in Canal Plus France for €525 million in cash.
The new company would be 65 per cent-owned by the Canal Plus Group, 20 per cent by Lagardere, 9.9 per cent by French broadcaster TF1 and 5.1 per cent by M6, the statement said.
Lagardere would have a call option to buy a further 14 per cent stake, exercisable 3 years after completion. The original owners of TPS - France's leading commercial channel TF1 and M6 - will have an option at the same time to sell their combined 15 per cent stake.