Barry Diller'sIAC/InterActive Corp. has agreed to sell its stake in Vivendi UniversalEntertainment (VUE) for $3.4 billion.

The deal will see Diller handover his 5.4% stake in VUE to NBC Universal -a stake which has long been a bone of contention between Vivendi and Diller andwhich had threatened to derail Vivendi's sale of Universal Entertainment to NBCin 2003.

Wednesday's move also endspending litigation between IAC and Vivendi Universal over tax liabilitiesrelated to Diller's stake in VUE.

Furthermore, Vivendi and NBCparent General Electric have agreed to defer by one year to January 2007 thedate on which Vivendi can cash in its stake in NBC Universal, and to May 2010the date on which G.E. can buy up Vivendi's stake in the merged company.

"We have put adefinite end to any kind of relationship between Vivendi UniversalEntertainment and Barry Diller's company InterActive," said Vivendi ChiefExecutive Jean-Bernard Levy during a conference call with journalists.

NBC Universal was createdin 2003 when Vivendi Universal sold a large part of its entertainment assets toNBC, including Universal Studios.

Vivendi Universal now has a20% stake in the newly created company, while G.E. has the remaining 80%.

Vivendi's entertainmentarm, VUE, was created in 2002 by the Franco-American media conglomerate andDiller's IAC Corp. When Vivendi sold its stake to NBC, Diller retained hisshare of VUE.

Diller, who headed Paramountstudios in the 1970's and 1980's and later set up Fox TV, is in the process ofbuying Ask Jeeves, seeing IAC move away from television and film assets andfurther into the Internet search advertising market.

Vivendi'sshares showed little movement on the French Bourse after the announcement