PARIS – French media and telecommunications group Vivendi has rejected an $8.5 billion offer by Softbank Corp. for Universal Music, the world’s largest music group, the Financial Times reported.
Vivendi told Softbank it was not interested because it sees the music company as central to its future strategy, the financial daily reported on its website Thursday, citing sources.
Neither Vivendi nor Softbank were prepared to comment on the story.
An $8.5 billion offer would value Universal Music at $2 billion to $3 billion above most analyst estimates, the Financial Times said.
Softbank’s all-cash proposal was not contingent on the outcome of the its bid for control of U.S. mobile operator Sprint, it added. The $21.6 billion Sprint deal was closed by Softbank last week.
“The message that Universal Music is not for sale fits with Vivendi’s strategy of trying to sell its telecoms holdings and regroup around entertainment assets,” the paper said.
A source said that “to sell Universal Music was never a possibility for Vivendi in as much as its strategy is based on its content and media.”
On Thursday, Moody’s downgraded Softbank to junk grade of Ba1, from Baa3, citing worries over the firm’s financial position after it bought Sprint.
The downgrade reflected the view that the debt-financed deal would weaken the mobile carrier’s financial flexibility, Moody’s said. The deal risks forcing Softbank to spend more to help Sprint with its $16 billion capital expenditure through 2014, it added.
“The ratings assessment assumes the acquisition provides no meaningful financial benefit to Softbank during at least the first two years of ownership,” Moody’s said in a statement.
Rival agency Standard & Poor’s cut Softbank’s credit rating to BB+ status earlier this month.