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$33.7 Billion Takeover Of Seagram Co. Creates New Media Giant

PARIS – With the purchase of Seagram – which still needs the approval of
shareholders as well as the European Union, U.S. and Canadian antitrust
regulators – France’s Vivendi and its pay television unit Canal Plus set the
stage for the creation of a massive communications and entertainment company
in Europe.

Vivendi boss Jean-Marie Messier confirmed the boards of Vivendi and Canal
Plus had approved the $33.7 Billion takeover of Seagram Co. Vivendi will
acquire an American movie studio, Universal, and the world’s biggest music
company, Universal Music Group.

The board of Seagram accepted the offer early Monday evening after a board
meeting that lasted less than two hours, the source said. The Seagram board
also had met Saturday and Sunday to discuss the proposed takeover. Seagram’s
Chairman Edgar Bronfman had flown to Paris late Sunday night.

The merger of Vivendi’s telecommunications and Web ventures, Canal’s
entertainment activities and Seagram’s film and music assets would create a
company with revenue of $65 billion and market capitalization of $100
billion. The deal is widely viewed as a trans-Atlantic response to America
Online Inc.’s $125 billion takeover of traditional media group Time Warner
Inc.

Vivendi shareholders are expected to hold 59 percent of the new group,
Seagram shareholders would get about 29 percent and Canal shareholders 12
percent.

Vivendi CEO Jean-Marie Messier will head the new company, to be called
Vivendi Universal.

Bronfman will serve as vice chairman with responsibility for the company’s
music operations. The Internet division also will report to Bronfman, said
the source.

Bronfman also will head the company’s spirits division, although those
assets, which include brands like Absolut vodka and Chivas Regal whiskey,
are expected to be sold swiftly. A source said preliminary discussions had
been held with prospective bidders, but a deal was not imminent.

Canal Plus Chairman Pierre Lescure is likely to be the third man in a
triumvirate at the top of the new merged group, heading the new company’s
film and TV business, comprising Canal Plus’s pay-TV activities, except
those in France, and Seagram’s Universal Studios, industry sources said.

Shares of Seagram rose $1.63 to close at $63.06 on the New York Stock
Exchange. In Paris, Canal Plus closed 1 percent higher at 203 euros, off a
high of 208.5 and Vivendi shares closed down 2.58 percent at 96.45 euros.

The deal will leave the newly merged group with debt of about $7 billion,
but the sale of the drinks arm should wipe this out.

Vivendi Universal will include such assets as Seagram’s Universal Pictures
division, which made the 1999 hit film The Mummy, and Seagram’s
world-leading Polygram music arm, based in Holland, which has stars like U2,
Sting and Sheryl Crow.

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