Vivendi, Scoot terminate merger talks

An on-again, off-again courtship between the two European suitors has ended in what appears to be a definitive breakup.

2 min read
An on-again, off-again courtship between two European suitors has ended in what appears to be a definitive breakup.

London-based Internet company Scoot declared Wednesday that talks to be acquired by French media giant Vivendi Universal have formally ended without a deal.

Britain's troubled Scoot, which provides telephone and Internet directory assistance, issued a terse press release that Vivendi "has informed the company that it has withdrawn from discussions with Scoot."

Scoot's board of directors "is continuing with its strategic review," which it expects to finish by the end of the month. The press release stated that the board will make an announcement regarding the company's fate at that time.

The announcement comes more than six weeks after a preliminary deal between Scoot and Vivendi fell through, apparently because Scoot was offended at the terms of the deal.

On April 27, Vivendi said it was in talks to purchase the remaining 78 percent of Scoot that it didn't already own. Scoot's battered stock spiked 60 percent that day, after a 32 percent boost in the previous two days.

But later that day--an hour before the English stock market closed--Vivendi executives said the deal was breaking down because Scoot balked at Vivendi's offer of 15 English pence--about 24 cents at current conversion rates--per share.

Vivendi issued a cautiously worded statement that there was "no certainty" that it would make any offer--and that in any case it wouldn't offer more than 15 pence per share.

Scoot shares immediately bombed, closing at 12.75 pence. An hour and a half after the market closed, Scoot rejected Vivendi's offer.

It appeared that Scoot's board would not settle for such a price after riding the Internet boom to spectacular highs. Scoot shares reached the lofty price of 351 pence in March 2000. Analysts said that Vivendi would have paid 300 pence per share as recently as September 2000.

Media reports in newspapers The Scotsman and The Guardian at the time said Scoot executives spurned the 15-pence bid as "wholly inadequate."

It's unclear whether Scoot and Vivendi continued working on a deal after the preliminary, high-profile deal fell through. Calls to Scoot's London headquarters on Wednesday went unanswered.

In March, Scoot named investment bank Merrill Lynch to conduct a strategic review of the business. Scoot's subscriber base had withered, and analysts critiqued it for problems with core technology. According to The Guardian, publishing company Trader.com and mobile phone company Vodafone may also have approached Merrill about an acquisition of Scoot.