Vivendi said Friday that it has agreed to pay John Malone's Liberty Media $775 million in a settlement of a lawsuit filed by Liberty in March 2003 in the U.S. related to the formation of Vivendi Universal Entertainment in May 2002.
Liberty argued in the case that Vivendi had inflated the value of its stock, which it used in 2001 to acquire from Liberty entertainment assets in the form of what was then known as USA Networks. It later emerged that Vivendi was in a liquidity crisis, which led its stock to decline.
Liberty got about 37 million Vivendi shares, or about a 3.5 percent stake in the company, in the deal. At the time, the deal was valued at more than $10 billion, but by the time Liberty sold its Vivendi shares in 2003, their value had slipped to about half.
The settlement of €700 million comes after a January 2013 jury verdict in favor of Liberty when a court awarded Liberty €945 million, or $1.04 billion at today's conversion rates, in damages and pre-judgment interest. Vivendi then filed an appeal, and a cross-appeal by Liberty followed.
The cross-appeal sought €584 million, or $643 million at today's conversion rates, in additional pre-judgment interest. "If Liberty had prevailed on that issue, [that] would have increased the award to €1.529 billion (approximately $1.729 billion)," Vivendi said.
"This settlement should not be construed as a concession by Vivendi of the validity of any of Liberty Media’s claims, or as an admission of any wrongdoing by Vivendi," it added. "Rather, despite the jury’s verdict, Vivendi continues to maintain that it did not commit any wrongdoing. Nevertheless, Vivendi is pleased to resolve this long-running dispute with Liberty Media on terms that Vivendi believes are in the interest of both the company and its shareholders."
Said Liberty president and CEO Greg Maffei: "We are very pleased to announce a settlement of litigation with Vivendi, which resulted in a payment of $775 million, of which we will net after-tax proceeds of approximately $420 million."
This article was originally published by The Hollywood Reporter.