VUP auction grinds on

The deadline for the sale of Vivendi Universal's publishing business has been extended as private equity syndicates continue to pore over the business.

An end to the auction for Vivendi Universal’s publishing arm is still not in sight and predictions of a deal by the end of October are beginning to look increasingly optimistic as the bid deadline, originally set at 23 September, is extended to 15 October.

A source close to one of the bidders said: “The deal is still very much up in the air. It is changing all the time. There is little clarity on when Vivendi will make a decision. There are also a lot of people involved, which makes it quite complex and unique. It grinds on.”

So far, the list of interested parties reads like a Who’s Who of European and US private equity, with the major players split into two camps. Each bidding consortium is led by a talismanic French house to make the deal palatable to the French government, which has already made clear its preference for the publisher to stay in French hands.  

In one corner there is Eurazeo, the French house connected to Vivendi adviser Lazard, which has joined forces with The Carlyle Group and Leeds Weld. In the opposing corner is PAI Management which is reported to have teamed up with a large syndicate consisting of Kohlberg Kravis Roberts, Thomas H Lee Partners, Blackstone Group, Bain Capital and Apaz Partners.

The extension to the bid deadline will give bidders more time to conduct due diligence. All parties are said to have complained about the quality of financial information available to bidders.

Vivendi may be hoping that extra time and information may lead to a fuller price from the financial buyers. According to another source: “An extension to the bid is an increasingly common tactic in auctions of this size. They’ll be trying to prize an extra dollar out of the bids.”

As a source from one of the consortia, who did not wish to be named, put it: 'The one who gets the deal is the one with the best offer in terms of price and conditions. VUP are under pressure, but they will not sell at any price. There are now discussions taking place between Vivendi and the bidders to better understand the offers. But we'll not act as fools, we will keep to a reasonable price.'

Both front running bidders are thought still to fall short of Vivendi’s €4bn sale target with Eurazeo said to be pitching at around €3.5bn and PAI offering a package totalling something nearer to €4bn.

Vivendi has committed to reducing its €19bn debt burden by €5bn by next March. Despite shareholder pressure to speed the disposal programme on its way, progress is said to have been too slow for CVC Capital Partners, Charterhouse Development Capital and CDC Ixis, all of whom abandoned their bid attempts in September.