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Microsoft eyeing Vivendi unit

Reports mounted Wednesday that Microsoft is negotiating to buy the video game arm of financially troubled French media conglomerate Vivendi Universal.

The New York Times, citing unnamed sources, said the two companies are negotiating a buyout. Investment bank Investec, citing unnamed Vivendi executives, painted a similar picture in a report released late last week, saying Microsoft could pay as much as $2 billion.

Faced with more than $20 billion in debt, Vivendi last year ousted CEO Jean-Marie Messier in favor of Jean-Rene Fourtou, who said the company would sell off $13 billion in assets by the end of 2004.

The company's games business has been seen as a prime sell-off target. Vivendi has three major game publishers: Sierra Entertainment, Blizzard Entertainment and Universal Interactive. The studios have produced major PC hits, such as the Warcraft series and the Diablo series, but they've produced few hits for the more lucrative game-console business.

Microsoft executives have said the company will continue to look at acquisitions that could help beef up the company's roster of exclusive games for its Xbox console. Microsoft last year paid $375 million to buy British game developer Rare, the creator of several hit franchises for Nintendo game systems.

News source: News.com

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