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. Last Updated: 07/27/2016

Vivendi Universal to Keep Its Music Business

LONDON -- Vivendi Universal plans to retain its music business and seek new investment partners for other U.S. entertainment assets, according to a report in the Financial Times newspaper on Monday.

The move could prompt Marvin Davis, the U.S. oil tycoon, to withdraw the indicative $20 billion takeover bid he has made for all of Vivendi's entertainment assets, including Universal Studios, theme parks and computer games, the paper said.

Directors of the French media and telecommunications group, which is holding a pivotal board meeting this week, favor a reorganization enabling it to keep control of Universal Music, the largest music company, for at least two years.

The board is due Thursday to discuss options for raising 6 billion euros ($6.45 billion) this year from the potential unwinding of its U.S. entertainment portfolio, focused around its Vivendi Universal Entertainment joint venture.

Disposals are said to be vital if Vivendi is to execute its recovery program.

While the group is considering options including an outright sale, initial public offering or partial disposal of several assets, executives at Universal Music have been assured the recording and music publishing company is likely to remain a core subsidiary for the short to medium term, the newspaper said.

The FT said senior Vivendi managers last week told a video briefing of Universal Music executives not to expect any change in the structure of that subsidiary.

"The clear message from Paris is that it would be foolish for Vivendi not to retain Universal Music when it is throwing off cash and contributing more than 1 billion euros in annual earnings," one insider said.