Vivendi Weighing Bids For Publishing Group

In a conference call to analysts Wednesday, Vivendi Universal chairman Jean-Rene Fourtou confirmed that the cash-strapped French-based conglomerate had decided to sell its entire Vivendi Universal Publishing operation. Fourtou explained that while it had initially planned to sell only Houghton Mifflin, Vivendi changed its mind after it received several inquiries from parties interested in acquiring all of VUP.

Fourtou said that Vivendi has received several bids for the publishing group and that it hopes to reach an agreement "as soon as possible," suggesting that a deal could be struck in as little time as two weeks. Vivendi hopes the sale will generate more than $3 billion, which the company will use to pay down its massive debt. Although Fourtou declined to confirm who has placed a bid for VUP, a consortium led by the Blackstone Group and its French partner BNP Paribas, and another that includes the Carlyle Group and its French ally Eurazeo, have been identified as the two primary contenders. French participation in the buyout of VUP is necessary since Vivendi asked all bidders to include in their proposals a provision ensuring "the preservation of VUP's French cultural heritage."

In addition to HM, VUP includes the French publishing companies Larousse, Le Robert, Bordas, Nathan and Robert Laffont, as well as the U.K. companies Chambers Harrap and Kingfisher.

Investment bankers not directly involved in the deal speculated that it is all but certain that after a deal is concluded, VUP will be broken into two pieces, with the U.S. investment groups retaining HM and their overseas partners taking control of the other worldwide assets. What will happen to HM, however, is not as clear. "There are rational arguments to break it up and sell off the pieces and there are rational arguments to keep it all," one banker said. "It's a judgment call."

There was some consensus that the elhi and college operations would be retained by the winning bidder and kept together, and that the trade and reference division could be sold to help pay down debt. "There are companies out there who would buy it [trade and reference] and there wouldn't be any antitrust issues," a banker said.