Vivendi Universal to buy MP3.com for 4.64 times revenue

Weekly Corporate Growth Report, May 28, 2001

The Deal: Vivendi Universal has agreed to purchase MP3.com for $372 million. The acquisition is a move by Universal to boost its digital distribution of music. After news of the transaction was announced, shares of Vivendi rose 57 cents to $68.23.

Discussion: MP3.com is a Web site that uses MP3 technology to distribute music over the Internet. MP3.com offers more than 960,000 songs from some 150,000 artists, mostly lesser-known artists looking for exposure, that can be downloaded free of charge. It also offers some premium subscription services and sells albums and compilation CDs.

Vivendi Universal's communications and media holdings include publisher Vivendi Universal Publishing, formerly Havas, and a stake in telecom provider Cegetel. The firm has floated a minority stake in Vivendi Environment, which is the world's number one water distributor with 100 million customers worldwide, offering water and waste management services; the company also produces electric power and provides road and rail transportation. It is divesting most of its construction and real estate holdings, as well as the Seagram beverage business.