Well it seems that NBC won the Vivendi Auction.

Ending months of speculation, Vivendi (V) and General Electric(GE)'s NBC agreed Tuesday to enter exclusive negotiations to create an entertainment giant potentially worth more than $40 billion.

NBC, a unit of General Electric (GE), clinched exclusive negotiating rights to fine tune a deal that gives it control of of a major media player that would rival global heavyweights such as Walt Disney Co. (DIS) and Viacom (VIA).

If concluded, the deal would bring together assets such as Vivendi's Universal Studios, the Hollywood studio behind The Hulk and The Mummy, and cable television network USA with NBC's broadcast network and cable channels including CNBC and Bravo.

After eleventh-hour talks with two top contenders, Vivendi held a special board meeting in Paris to vote on eliminating a consortium led by Edgar Bronfman Jr. (search) and approve a preliminary deal with General Electric (GE)'s NBC for an entertainment merger.

"Together we have developed a plan to create an exceptional media company, which would rank among the most profitable in the U.S.," said Vivendi Chairman and CEO Jean-Rene Fourtou.

Vivendi said that if the new company is formed, it would be 80 percent owned by GE and 20 percent by Vivendi. Vivendi Universal Entertainment shareholders will also receive a $3.8 billion "cash consideration."

One source close to the deal said Vivendi valued its 20 percent stake at $9 billion, implying a valuation of the merged entity of around $45 billion.

The decision brings an end to a long hot summer of negotiations that gripped the media industry and ran up huge bills for an army of advisers as some of Hollywood's biggest egos jostled for the Vivendi assets.

Vivendi shares ended up 4.1 percent at 16.60 euros in Paris and rose $1.16 to $18.06 in New York, where markets had been shut on Monday for Labor Day. GE shares were up 1.6 percent at $30.04 at 1831 GMT.

NBC had for long been Vivendi chief Jean-Rene Fourtou's favored choice. However, Vivendi's vice chairman Bronfman fought hard to stay in the race over the past week and remained in negotiations over a bid worth around $13 billion on Monday.

"Edgar Bronfman is bewildered," said one source close to the auction. "But there was little hope of swaying Vivendi today."

In the end, Vivendi had to choose between Bronfman's offer of upfront cash to cut its debts or the prospect of a better return in the long run under an NBC deal.

NBC strengthened its hand after firming up the cash element of its deal in recent weeks. Vivendi said shareholders of Vivendi Universal Entertainment would receive $3.8 billion of "cash consideration" against a commitment by General Electric to issue its stock as well as a $1.6 billion debt reduction.

The partnership would have combined proforma revenues of $13 billion in 2003 and underlying earnings before interest, taxes depreciation and amortisation of about $3 billion.

Fourtou, who was brought out of semi-retirement to get Vivendi back on its feet after the acquisition excesses of former chief Jean-Marie Messier (search), kicked off an auction more than three months ago with a $14 billion asking price.

Some of the biggest titans of the U.S. media world expressed interest in Vivendi's entertainment arm during the bidding process, including cable TV mogul John Malone of Liberty Media Corp., CBS and MTV parent Viacom and Metro-Goldwyn-Mayer.

Both MGM and Malone said they were dropping out of the bidding process because they felt the price was too high. Viacom had expressed interest only in the cable channels, and was effectively left out of the final round of bidding when Vivendi said it would continue talks only with NBC and Bronfman's group.

Reuters and the Associated Press contributed to this report.

Let’s hope it doesn’t affect Half-Life 2.

[ Source - Fox News ]