NBC & VUE Combine Assets in Forming NBC Universal Joint Venture

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Presentation transcript:

NBC & VUE Combine Assets in Forming NBC Universal Joint Venture

Methodology Step 1: Estimate total value of joint venture Step 2: Estimate value of assets contributed by each partner Step 3: Determine form of payment Step 4: Determine ownership distribution

Step 1: Value Combined Assets of Joint Venture $3 billion EBITDA (EBITDA of contributed assets) GE contributes $2 billion of EBITDA; VUE contributes $1 billion of EBITDA 14 (Comparable entertainment company multiple) Relative valuation method: $3 billion x 14 = $42 Billion

Step 2: Calculate Value of Each Partner’s Contribution to the Joint Venture Vivendi General Electric $14 Billion (1/3 of $42 Billion) $28 Billion (2/3 of $42 Billion) Value of Combined GE and VUE Assets = $42 billion

Step 3: Form of Payment to Vivendi $4.0 billion (GE stock) $1.6 Billion (Assumed Vivendi debt) $8.4 billion (Value of Vivendi’s equity position in NBC Universal) $14.0 billion (Purchase price paid to Vivendi for VUE assets)

Step 4: Determining Ownership Distribution At Closing Vivendi chooses to receive cash infusion at closing = $5.6 billion (i.e., $4 billion in cash in lieu of GE stock + $1.6 billion in assumed Vivendi debt) Vivendi’s % ownership in NBC Universal ($14B - $5.6B)/$42B = $8.4B/$42B = 20% At closing: GE ownership = 80% Vivendi = 20%