Nov 22, 2002 By Kim Housego Associated Press Writer 3 min read

PARIS (AP) – Vivendi Universal SA said Thursday it had rejected a bid launched by billionaire oilman Marvin Davis for its lucrative U.S. entertainment assets. News about the 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.

Davis said Thursday he had offered this fall to buy the entertainment assets of Vivendi Universal for about $15 billion, plus assumption of $5 billion in Vivendi debt.

In a statement issued in Los Angeles, Davis said he felt the offer was a “full and fair value for the assets and VU’s response has been positive” and said additional meetings with Vivendi have been scheduled for early next year.

However, Vivendi spokesman Alain Delrieu told The Associated Press that Vivendi made clear to Davis’ representatives at a Nov. 5 meeting that “the assets are not for sale.”

The assets in question include Universal Studios, Universal Music and Vivendi’s interests in cable networks and the Universal Studios theme parks.

Vivendi chairman Jean-Rene Fourtou, who is paring down the vast conglomerate to trim its debt, 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.

The offer from Davis, who once owned Twentieth Century Fox studios, was first reported Thursday by The Wall Street Journal.

Despite Vivendi’s public rebuff, a spokesman for Davis maintained Davis has been invited back in January for further talks. Davis said the deal could be closed in three or four months.

Separately, French media reports said Vivendi has found buyers for half 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 reported.

Analysts said the report on the Davis bid for the entertainment assets had reassured investors that the debt-laden 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, analyst at Williams de Broe in London.

Vivendi’s shares closed up 21.16 percent at 13.8 euros ($13.77) on the Paris stock exchange.