Page 238 - 2012 Annual Report

238 VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 2 Major changes in the scope of consolidation
announced on February 7, 2013. Additional, less significant divestments
were also sold bringing the total amount of sales to exceed £530 million,
all of which are pending regulatory approvals.
With these sales, Vivendi nears the finalization of its regulatory
commitments following the acquisition of EMI Recorded Music,
while reinforcing UMG’s position as a worldwide leader in music. The
combination of UMG’s and EMI’s Recorded Music businesses is expected
to generate annual synergies of more than £100 million as previously
stated. As a result of the sale of Parlophone Label Group, the acquisition
of EMI Recorded Music acquisition will be at less than 5xEBITDA multiple,
including disposals, restructuring charges and synergies.
Purchase price allocation
In accordance with the accounting standards applicable to business
combinations, UMG has performed a provisional allocation of the purchase
price using the fair value of assets acquired and liabilities incurred or
assumed, based on analyses and appraisals prepared by UMG with third-
party appraisers, if any. The major acquired assets were the music rights
and catalog.
The allocation of the purchase price will be finalized within the 12-month period as required by accounting standards and the final amount of goodwill may
significantly differ from the amount presented below:
On December 2, 2011, Bolloré Group and Canal+ Group announced the
entry into a definitive agreement regarding the acquisition by Canal+
Group of Bolloré Group’s free-to-air channels, Direct 8 and Direct Star.
In February 2012, Canal+ Group exercised its option to acquire, in one
transaction, a 100% interest in Bolloré Group’s television business, in
exchange for the issuance of Vivendi shares.
On September 27, 2012, Vivendi carried out a share capital increase of
22,356 thousand shares, which it paid in consideration for the contribution
made by Bolloré Media, representing an enterprise value of €336 million.
After taking into account a €16 million price adjustment related to debt and
changes in working capital, the fair value of the transferred counterparty
amounted to €320 million. Bolloré Group committed to retain the Vivendi
shares received in connection with the completion of this transaction for
a minimum period of six months after September 27, 2012. Since that
date, Vivendi and Canal+ Group have been granted guarantees capped at
€120 million. These guaranties expire 3 months after the expiration of the
applicable statute of limitations for tax or social matters, and 18 months
after September 27, 2012 for all other matters. D8 and D17 have been fully
consolidated since September 27, 2012 and were renamed D8 and D17, in
connection with their launch on October 7, 2012.
As part of the French Competition Authority’s approval of the transaction on
July 23, 2012, Vivendi and Canal+ Group undertook certain commitments.
These commitments provide for restrictions on the acquisition of rights for
American movies and television series from certain American studios and
for French movies, the separate negotiation of certain rights for pay-TV
and free-to-air movies and television series, limitations on the acquisition
by D8 and D17 of French catalog movies from StudioCanal, and the
transfer of rights to broadcast major sports events on free-to-air channels
through a competitive bidding process. These commitments are made for
a 5-year period, renewable once if the French Competition Authority, after
having performed a competitive analysis, deems it necessary. In addition,
on September 18, 2012, the French Broadcasting Authority (Conseil
Supérieur de l’Audiovisuel) approved the acquisition of these channels,
subject to certain commitments relating to broadcasting, investment
obligations, transfer rights, and the retention by Canal+ Group of the D8
shares for a minimum period of two and a half years.
(in millions of euros) September 28, 2012
Carrying value of EMI Recorded Music’s assets and liabilities acquired by Vivendi (A) (100)
Fair value adjustments of EMI Recorded Music’s acquired assets and incurred or assumed liabilities (provisional):
Music rights and catalog 1,036
Deferred income tax, net (332)
Other (94)
Total (B) 610
Fair value of EMI Recorded Music’s acquired assets and incurred or assumed liabilities (C=A+B) 510
Fair value of EMI Recorded Music’s assets and liabilities held for sale 593
Provisional goodwill 301
Purchase price of 100% of EMI Recorded Music 1,404
Moreover, the acquisition-related costs amounted to €56 million in 2012 and to €6 million in 2011. They were recorded as other charges from EBIT in the
Consolidated Statement of Earnings and as investing activities in the Consolidated Statement of Cash Flows.
2.2. ACQUISITION OF BOLLORÉ GROUP’S CHANNELS BY VIVENDI AND CANAL+ GROUP