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Vivendi close to buying Mediaset's pay TV business

PARIS -- French media firm Vivendi SA said Friday that it had acquired the pay TV business of Italy's Mediaset SpA as part of a broader alliance, moving to snap up more assets to create a European rival to U.S. streaming-video giant Netflix Inc.

Under the terms of the deal, Vivendi and Mediaset will swap 3.5% stakes, the companies said. Since Vivendi's market value is roughly six times more than Mediaset's, Vivendi will acquire Mediaset's 89% stake in Mediaset Premium, the Italian company's loss-making pay TV unit. The unit is valued at around EUR900 million ($1.02 billion) by some analysts. Spain's Telefónica, which owns about 11% of Mediaset Premium, is also selling its shareholding to Vivendi as part of the deal.

The alliance with Mediaset is a key step in Vivendi Chairman Vincent Bolloré's project to build a multilingual, pan-European group to challenge Netflix and pay-TV giant Sky PLC. Vivendi and Mediaset also said that they would jointly work on a new European streaming service.

"When Netflix announced it was opening in France, Spain, Italy, it was clear Vivendi as a media company would have to adapt," said a person familiar with Vivendi's thinking.

Vivendi also has its sights on the U.S. market, said a person familiar with the matter.

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