1. NBC & VUE Combine Assets in Forming NBC Universal Joint Venture

2. 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

3. 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

4. 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

5. 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)

6. 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%