French media conglomerate Lagardere SCA (MMB.FR) said Thursday that it intends to sell its 20% stake in Canal Plus France, in a move that would simplify Lagardere's structure and could allow Vivendi SA (VIV.FR) to fully own the French pay-TV channel.

Under the conditions of a Canal Plus France shareholder agreement, Lagardere will first enter talks with Vivendi over the stake sale. Vivendi already owns 80% in Canal Plus France, a unit of Canal Plus Group.

Vivendi has a policy of buying out minority stakes and has repeatedly said that it would be interested in buying out the stake in Canal Plus France. Thursday, it said it had been informed of Lagardere's intention to sell the stake, but declined to provide any more details.

If Vivendi acquires the stake, it will give it 100% ownership of Canal Plus France but if the two group fail to agree, Lagardere can sell the stake on the market.

Lagardere has repeatedly said that it wants to sell its stake in Canal Plus and its chief financial officer, Dominique D'Hinnin, said late last year that media-to-telecom group Vivendi would be the likely buyer but it would depend on price.

At 0954 GMT, Vivendi shares were trading flat at EUR19.96 while Lagardere shares were trading down 2.4% at EUR31.88, as some analysts highlighted the two groups may have difficulty agreeing on a price.

"Pricing is an issue. We believe Vivendi is trying to obtain a large discount to the recent transaction multiples that would value the 20% stake at about EUR1.5 billion, which Lagardere might not accept," Exane BNP Paribas analysts Charles Bedouelle said in a note to investors.

The bank values the stake at EUR1.3 billion but noted that recent feedback from Vivendi suggested a price well below the EUR1 billion.

"An initial public offering seems an unlikely outcome," Citigroup said in a research note, noting that if Vivendi and Lagardere agree on a price, the transaction would be positive for both groups.

"For Vivendi, investing capital in Canal Plus, a business that it knows very well and assuming a sensible price, seems a strong strategic move to us," Citigroup said.

In recent months, Vivendi has bought up the other minority stakes in Canal Plus France from French broadcasters Television Francaise 1 SA (TFI.FR) and M6-Metropole Television SA (MMT.FR).

-By Ruth Bender and Patricia Kowsmann, Dow Jones Newswires; +33 1 40 17 17 54; ruth.bender@dowjones.com
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