Vivendi rejects US$8.5b SoftBank bid for Universal

Spurned offer that would have boosted mobile carrier's content coincides with credit jolt

PUBLISHED : Saturday, 20 July, 2013, 12:00am
UPDATED : Saturday, 20 July, 2013, 5:31am

SoftBank made a US$8.5 billion bid for Vivendi's Universal Music division that the French media firm rejected, according to people informed about the proposal.

Directors at Paris-based Vivendi turned down SoftBank shortly after the inquiry was made, said the people, who asked not to be identified.

A deal would have handed the record company to the Tokyo-based carrier that its founder, billionaire Masayoshi Son, wants to turn into the world's largest mobile communications company.

SoftBank, which had its credit rating cut to junk on Thursday after completing its US$21.6 billion acquisition of a controlling stake in Sprint, is pursuing deals outside its home market to tap faster growth.

Japan's third-ranked wireless carrier may be seeking to cut its reliance on services like Apple's iTunes by providing its own music, said Tomoaki Kawasaki, an analyst at Iwai Cosmo in Tokyo.

"SoftBank is an internet communications company, so it's also making money from content," Kawasaki said. "The attempt to buy the music business is part of that. It was unfortunate it didn't work out this time, but Son should have something up his sleeve, even with the downgrade."

Spokesmen for SoftBank and Vivendi declined to comment.

The offer for Universal came as Vivendi was re-evaluating its structure amid a sluggish share performance and tough competition in the French mobile telecommunications market. The firm is also the key shareholder of game-maker Activision Blizzard.

SoftBank had its credit rating cut to Ba1, the highest non-investment grade, from Baa3, by Moody's Investors Service. The rating agency took the action about two weeks after a similar move by Standard & Poor's.

The downgrade made a potential acquisition more difficult than it would have been three months ago, said Yoshihiro Nakatani, a fund manager at Asahi Life Asset Management.

"Still, there's a possibility remaining for SoftBank to look for more acquisitions or growth opportunities if they get some discretion" from lenders, he said.