Billionaire Marvin Davis, who at one time has tried to buy CBS, NBC and MGM, has made an unsolicited $15-billion bid for the entertainment assets of debt-burdened Vivendi Universal.
Vivendi, the French parent of Universal Studios and Universal Music Group, has been shedding assets but said Thursday that its movie studio, record label, theme parks and other entertainment units were not for sale. Davis, however, said he expected to keep talking with the company.
Under the proposal, Davis also would assume $5-billion in debt. His representatives met with Vivendi Universal executives in Paris on Nov. 5 and soon after, the company rejected the bid, Vivendi spokesman Alain Delrieu said.
In a statement issued in Los Angeles, Davis said his offer was a "full and fair value for the assets and VU's response has been positive." He said additional meetings with Vivendi are set for early next year.
Vivendi reportedly rejected the offer as too low and might be open to a higher bid or to selling some of the assets or spinning off the entertainment divisions and keeping a minority interest.
But any deal faces a huge obstacle in the form of Barry Diller, who owns 1.5 percent of Vivendi Universal Entertainment, the company that was formed last year to run Vivendi's U.S.-based entertainment operations, excluding the music group and video game divisions.
VU Entertainment was formed after Vivendi bought the entertainment assets of USA Networks, which was owned by Diller.
Any sale to Davis could also founder because of restrictions Diller negotiated as part of that sale. If Vivendi sells any of the entertainment assets, it may have to pay Diller as much as $2-billion to cover taxes that would become due on the original deal.
And then there is the bad blood between Diller and Davis.
Davis bought Twentieth Century Fox studios in 1981 and in 1984, wooed Diller from Paramount to run Fox. Less than a year later, Davis sold the company to Australian media magnate Rupert Murdoch.
Davis and Diller are known to have clashed in their brief time together at Fox and Diller reportedly still harbors bad feelings for the 77-year-old Davis, who made his original fortune in the oil business.
Diller, who gave the commencement address Thursday at Concord Law School, an online institution based in Los Angeles, declined to comment.
Diller recently consolidated his hold on Vivendi's entertainment assets by being named co-chief executive of a new group that includes the music group and video game divisions.
The appointment is seen as a sign of a growing bond between Diller and Jean-Rene Fourtou, the chairman of Vivendi Universal. Ultimately, Diller could have a far greater influence on any decision than Davis's millions.
"Vivendi already has a partner," said Skip Paul, a former board member of MCA, which owned Universal when it was run by legendary media mogul Lew Wasserman.
"No one understands the value of these assets and the strength of his present position better than Barry Diller. The trump cards have already been dealt."
It is also not clear that Universal is for sale.
Fourtou is paring down the vast conglomerate to trim its debt. He has said he plans to sell off about $16-billion in assets by the end of 2004. However, he plans to keep the group's focus on entertainment.
Separately, French media reports said Vivendi has found buyers for half of its 40.4 percent stake in Vivendi Environnement, and that the buyers will have an option to buy Vivendi's remaining shares in 2004. Vivendi declined to comment on the reports.
Electricite de France is expected to be one of those buyers, with a 4 to 5 percent stake, France's Les Echos economic newspaper said.
News about the Davis bid _ a sign of renewed confidence in the debt-laden media giant _ sent Vivendi's stock surging up 21 percent on the Paris stock exchange.
Analysts said investors were reassured that the company has suitors, supporting Vivendi's share price and keeping the fear of bankruptcy at bay _ even if the French conglomerate is unlikely to accept the bid.
"It's in Vivendi's interest to look like it's seriously considering a bid, but it's unlikely to actually sell," said Mehra Meh, an analyst at Williams de Broe in London.
Vivendi shares closed up 21.16 percent at 13.8 euros, or $13.77, on the Paris stock exchange. The company's U.S.-traded shares gained $2.28, or 19.5 percent, to close at $14.