Vivendi Universal has announced NBC as the victor in its long-gestating auction of the company's US entertainment assets that include Universal Studios, television interests and theme parks.
In the announcement, made soon after the Paris bourse closed, Vivendi and NBC parent General Electric said it had signed a letter of intent with Vivendi to merge Vivendi Universal Entertainment (VUE) and NBC into a new structure, likely to be called NBC Universal.
Vivendi will retain 20% of the newly formed entity while GE will hold 80%.The deal also includes a cash payment of $3.8bn which will help Vivendi further reduce its $13bn debt mountain.
The two groups said the exclusive negotiations would help drive a swift conclusion of the merger. Vivendi Universal chairman and chief executive Jean-Rene Fourtou said he did not expect European Union competition authorities to block the deal.
General Electric vice-president and NBC CEO Bob Wright will take over as head of the new company, which will be one of the largest media groups in the world with revenues of over $13bn and a book value of over $40bn.
"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the US," Mr Fourtou said in a statement.
"VU is proud that it would have a 20% stake in such a company and I am personally happy to have the opportunity to merge VUE into an entity that will provide VUE with the complementary assets and means to develop its operations to the fullest," he added.
Jeff Immelt, chairman and CEO of General Electric, said the merger would create a "global leader in the entertainment industry" and be beneficial to both companies' shareholders.
Bob Wright said: "This transaction would create a media company that is superbly positioned to generate substantial growth both now and in the long term. The assets of NBC and VUE are extremely complementary, and the combination of VUE's rich content library, superior television production facility, and attractive cable brands with NBC's industry-leading broadcast network and well-established cable properties could benefit shareholders for years to come."
Vivendi said the merger deal would help it meet its debt reduction targets announced earlier this year.
"Between now and the finalisation of the transactions, Vivendi Universal will have realised its programme of non-strategic divestments worth Euros 16bn between now and the end of 2004."
Last week, Vivendi announced it was deciding between Bronfman's proposal and that of NBC. Over the weekend, it was hinted that Bronfman's consortium was out of the running despite the promise of more upfront cash.
But the NBC deal means and end to Mr Bronfman's bid to regain control of the family silver he sold to former Vivendi Universal chief Jean Marie Messier three years ago.
"Now that Vivendi's board has decided to enter into exclusive negotiations with GE/NBC, I am hopeful that Vivendi's strategic direction will reward its employees and shareholders for their patient and steadfast support," he said in a statement.