==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1)
OR SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
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HOUGHTON MIFFLIN COMPANY
(Name of Subject Company (Issuer))
VIVENDI UNIVERSAL, S.A.
SORAYA MERGER INC.
(Names of Filing Persons (Offerors))
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
(including associated rights)
(Title of Class of Securities)
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44156010
(CUSIP Number of Class of Securities)
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George E. Bushnell, III, Esq.
c/o Vivendi Universal Holding I Corp.
800 Third Avenue, Seventh Floor
New York, New York 10022
Telephone: 212-572-7855
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of filing persons)
Copy to:
Faiza J. Saeed, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Calculation of Filing Fee:
==============================================================================
Transaction Valuation* Amount of Filing Fee
------------------------------------------------------------------------------
Not applicable. Not applicable.
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*Set forth in the amount on which the filing fee is calculated and state how
it was determined.
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes to designate any transactions to which this
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
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The description contained herein is neither an offer to purchase nor a
solicitation of an offer to sell shares of Houghton Mifflin Company. At the
time the tender offer is commenced, Vivendi Universal will file a Tender Offer
Statement and Houghton Mifflin Company will file a Solicitation/Recommendation
Statement with respect to the offer. The Tender Offer Statement (including an
offer to purchase, a related letter of transmittal and other offer documents)
and the Solicitation/Recommendation Statement will contain important
information that should be read carefully before any decision is made with
respect to the offer.
The offer to purchase, the related letter of transmittal and certain other
documents, as well as the Solicitation/Recommendation Statement, will be made
available to all shareholders of Houghton Mifflin Company, at no expense to
them. The Tender Offer Statement (including an offer to purchase, a related
letter of transmittal and other offer documents) and the
Solicitation/Recommendation Statement will also be available at no charge at
the SEC's website at www.sec.gov.
Broadstreet
Res. # 19041589
Moderator: Stephen DuPont
6/1/01 - 8:45 a.m. MT
Page 1
VIVENDI UNIVERSAL ANNOUNCES AGREEMENT TO ACQUIRE HOUGHTON MIFFLIN
TRANSCRIPT OF PRESS CONFERENCE AND Q&A WITH REPORTERS
JUNE 1, 2001
Jean-Marie
Messier: Along with me here is the Chairman and CEO, Nader
Darehshori. Nader, we are very pleased to be here together
today. Agnes Touraine who is in charge of all of Vivendi
Universal Publishing activities and my COO, Eric Licoys,
deserve specific recognition for the time, the dedication,
during this legal negotiation. So, I just want, before
asking Nader to present to you very quickly this transaction
of Houghton Mifflin. Just to replace this acquisition and
the strategy of Vivendi Universal. I just want to emphasize
for you three points. The first one is that we have decided
within Vivendi Universal to target selectively some key
edutainment content fields and we are looking to only one
thing in those key interplay edutainment content fields: we
want to achieve the word wide leadership in those. And we
will stay only in the fields where we can achieve this
worldwide leadership. After what I hope will be a very
successful acquisition of Houghton Mifflin where will we be?
The music, that's done. The movies, that's done. In the
games, that's done. Education, we're number two worldwide,
that's done. In sports, we are number one in Europe. So, as
you can see, this acquisition of Houghton Mifflin is a very
substantial, very important one which will allow us to be
very close to our target. We have five key fields of
entertainment content where we want to achieve worldwide
positions. We will be there after this acquisition. The
second point I want to stress is that the second target of
Vivendi Universal is to strengthen distribution and
aggregation reach, and here to progresses made over the last
few months that are just impressive. In terms of
distribution reach, if you start with the music side through
Duet, Yahoo and much more to come. If you stay on the music
side, the goal is with getmusic, Emusic and with the MP3.com
acquisition we have now all the needs, all the skills that
we need, including technology skills. And the technology
skills of MP3.com will be used not only for music but for
all our content. Just once a year, through the aggregation
of the Intel Network side, Vivendi Universal, that's more
than 200 million pages viewed per month. Now you can say
that Vivendi Universal is one very important player, one of
the leaders in terms of Web audience and definitely the
world leader in edutainment and entertainment Web audience.
That's the point on the distribution and aggregation skills.
If you look at Vizzavi, it took off a few months ago in the
U.K. in December, I'm pleased to report that we have no more
than 1.5 million registered users to Vizzavi in Europe and
we expect to be well ahead of the 2 million registered users
target that was our target for July. That's the second goal
of Vivendi Universal. The third one, six months after the
merger with Seagram and Canal+ our focus on executing and
implementing very quickly and efficiently the merger because
we are not only aggressively pursuing the implementation of
our strategy, we are also aggressively pursuing the
operational implementation of Vivendi Universal. I'm just
back less than one hour ago from Orlando where during three
days we had 400 managers of Vivendi Universal. It has been
an incredibly positive, dynamic, enthusiastic meeting. What
has happened there is just fantastic with the numbers of
people who have met with the members of dozens of specific
meetings between the different teams in order to develop new
products, new services, it has been incredibly positive. And
if I want to take only one example of early achievements in
terms of Vivendi Universal before going back to Houghton
Mifflin let
me tell you a little bit about The Mummy Returns. The Mummy
Returns is a wonderful movie. That's already today U.S. plus
international more than $250 million gross. It will go for
more than 500 we think on a worldwide basis. But for us, for
Vivendi Universal, The Mummy Returns is more than a movie.
The offshoots are the upcoming DVD and video sales, but it's
more than that. We have decided to make a spin-off of The
Mummy Returns with The Scorpion King which will be on the
screen in 2002. But it's more than that. We have committed
to assume the TV of The Mummy Returns. But it's more than
that. We signed 35 global consumer products licenses of The
Mummy Returns characters. But it's more than that. We have
now the Chamber of Doom attractions in all Universal theme
parks that we will continue to develop, but it's more than
that. We, in June we released the sound track of The Mummy
Returns. But it's more than that. It goes on the publishing
side. We published the translation in different languages;
the book translation of the story of the field. But it's
more than that. We already released the interactive game on
the Game Boy and it is coming on the Play Station 2. So
that's what The Mummy Returns is about. The only two pieces
which are still missing for The Mummy Returns are the
educational software based on the characters of The Mummy
Returns. I can imagine to have, for example, learning tools
for kids, translations and last but not least what I think
would happen personalizations of voice mail on the mobile
with ring tones welcoming you on the voice mail and saying
hi this is so and so I am pleased to welcome you on voice
mail. That's what Vivendi Universal is about. As I just want
to point out that the strengths of this group is in all
entertainment fields. To be able to reach customers on a
global basis through all platforms and through all devices.
And this is the achievement of Vivendi Universal's strategy.
And I think coming back to Nader, the Houghton Mifflin
acquisition in the education field is for us a part of this
entertainment activity. We were number one in Spanish
language. That's very important because Spanish language is
such a great market in the U.S., for example. We were number
one in Portuguese. We were number one in the exotic French
language. We were missing a strong position in the English
language and in the United States. Now with this
acquisition, we are going to be a strong number two on a
worldwide basis, and with Vizzavi, in the education field we
will have more access to customers, with more ability to
develop all content on different platforms, including
digitized educational software platform and with more
ability than our competitors to develop them in different
languages...just reflecting what the global world here has
to say about the world of cultural diversity. That's what
Vivendi Universal is about, that's where the Houghton
Mifflin acquisition is so fitting and fits so greatly in
this strategy. Nader, the floor is yours.
Agnes Touraine: Thank you. Obviously, it's a great pleasure to be here to
present to you with Nader the acquisition of Houghton
Mifflin. It's really important for us at Vivendi Universal
Publishing and, again, we are very, very happy today with
the fact that we are going to be the number two publisher on
a worldwide basis. But let's go to the slides and tell you
that Vivendi Universal launched today its offer for Houghton
Mifflin at $60 per-share for total consideration of $1.77
billion with an average debt of $480 million. Again, we are
going to become number two worldwide in education. As you
know, number one is Pearson. Out of ten, we are number one
in front education, number one in Spain, number one in
Brazil. We do have also a very prominent position, we are
number one in Mexico with Grand Larousse and we do have in
product activity also in the U.S. with CD-ROM with Knowledge
Adventure and introducing a product with our educational
resources set forth. So all in all if we join our forces,
Houghton Mifflin and Vivendi Universal in education again,
we become number two. It's really key as of today because,
obviously, education is local, but it's becoming more and
more global with technology and Internet so our strategy,
again, is to leverage technology on the global basis while
at the same time being sure that we have local content. What
is important to know at a first glance, is
that the acquisition is to be largely refinanced by the
disposal of Vivendi Universal assets, and basically those
assets are the free sheets. The French activities of
distributing newspaper with advertising in newspapers are
free and they are distributed all throughout France, it's a
product activity. And we are going to divest also our trade
show activity and information businesses. The rationale of
this is those businesses are, obviously, very good; however,
they are very French and we don't see an opportunity with
this business to become really global and to have a perfect
fit with the Vivendi Universal strategy. So, first of all, I
would like here to thank sort of everybody, all the people
who are working with us. They have been doing an outstanding
job and, again, they will allow us to become a world wide
player in education and to become number two. Now I will
leave the floor to Nader in order to present Houghton
Mifflin. Thank you.
Nader Darehshori: Thank you, and yes, of course, we are delighted today to be
part of this growing and dynamic organization. It's my
pleasure to walk you through the slides that we have.
Houghton Mifflin was founded in 1832. It's a
well-established Boston-based company. Year 2001 budget for
revenues is $1.2 billion, which 97 percent is in the U.S.
and that's where within these roads will be very important.
We are primarily a U.S. publisher. This merger will make it
possible for us to be a global player. Our EBITDA margin is
25 percent of 2001 budget, which is a pretty attractive
margin. Market capitalization of $1.3 billion as of April
25, 2000, and we have 3,500 employees. We divide our
publishing into three different segments, K through 12,
kindergarten through 12 publishing is complimented by School
Division which publishes phrasal books and supplementals for
K through, kindergarten through sixth grades, and depending
on the program, sometimes sixth through eighth grades.
McDougal Littell is our secondary publishing arm, publishes
books for high schools and middle schools from grade six to
12. Grade Source Publishing, which is our new company
started in 1996 growing very rapidly in supplemental market.
They publish supplemental books for kindergarten through
grade 12. Sunburst, this is our technology company. They
publish mostly on CD-ROM platform and the Internet. They
have K through 12 publishing. And then Riverside Publishing
Company, which is our assessment arm. This is where we
develop well known tests such as Iowa Test of Basic Skills,
Woodcock Johnson tests, which is clinical tests, and then we
have start up called Klatspell. Higher education, we are the
fourth largest college publisher in the country and with Mr.
Massier's help, our goal is to be close to number one. It's
a dynamic division and our third segment is our trade and
reference publishing. It's where we publish trade books for
adults, children's books and dictionaries and reference
materials. Then, of course, we have computer adoptive
technologies. They are in business of developing products
for certification and actually more in technology
certification and credential emphasis. We, in school
publishing, our focus is in reading, language arts and
mathematics. One out of four children in America learn to
read from our reading materials. We are very well known and
respected in that field. Language arts or spelling is the
number one program in the country. Mathematics, we are
making great stride and we have a new program in California
and it's being received very well. We had a program last
year in math that did very well in California. These
disciplines roughly represent 75 percent of the elementary
school market nation wide, and that's why it's important to
be a player in this. 60 to 65 percent of Houghton Mifflin K
through 12 sales are derived from reading and language arts.
16 percent of Houghton Mifflin came K through 12 sales
derive from mathematics. In K through 12 we are the leader
in mathematics in literature and in social studies,
especially world history and American history. This is a
very dynamic area for us. It's growing. The industry is
growing rapidly and we're growing faster than industry. In
assessment, as I mentioned, through our Riverside we publish
the Iowa Test of Basic Skills. These are standardized
national norm tests. We also develop Stanford Bennett
intelligence test and
as I've mentioned, Woodcock Johnson Clinical Test in our
Riverside company. In Sunburst, we concentrate also on
language arts and mathematics program. Our supplemental
division, Great Source, we're also well known and respected
in the areas of language art and mathematics and,
increasingly, we are beginning to develop programs for
summer schools, reading and mathematics. College we are
either not in a discipline or when we are in a discipline,
we are formidable competitors in that discipline. For
example, out of 36 disciplines in college, we are only a
player in 18 of them, and we are either number one or two or
at least number three. For example, we are number two in
history, number two in foreign languages, and so on, but we
are not a player in physics, engineering and so on. In trade
and reference division, this is where the company started in
1832. We are recognized for quality and outstanding
publications. In our early history, we published some of the
most well known American guidance and today we also publish
some of the really well-known American writers. Fictions,
biographies, autobiographies and so on. Our children's
publications in this division are very well know and
respected immensely. Through this division we publish
Curious George books. For 50 years, they have been one of
the most successful books for children. And recent and
contemporary writers such as Chris VanOsburg and David
McCollough.
Messier: OK. I think, I guess that we, the offer price slide is self
explanatory, so you can come back with the price bench mark
Agnes Touraine: Just if you want to say that I would like to thank Nader and
the team. I think they are all a very good team of Houghton
Mifflin here with us today and, again, we have been very
impressed by the team within Houghton Mifflin. We have
gotten along very, very well. And, obviously, we do share
the same objective, which means quality education and
working all together in order to build, again, a worldwide
company. [unintelligible] is a price bench mark. Again, what
we said earlier, this sort of consideration is $2.2 billion,
which means 1.9 times 2001 saved, 7.7 times 2001 EBITDA
before mergers and we are going to say a few words about
synergy in a few minutes. 10.7 times 2001 EBITDA
amortization and before the merger, but you know in this
industry you have EBITDA before amortization and after
complete amortization. Our synergy, I will describe again of
2001 EBITDA. If you can -
Messier: Let's go directly to synergies
Touraine: OK. So -
Messier: You will come back to price bench mark if any questions are
raised.
Touraine: So, the acquisition and synergy continue to make up synergy
of $14 million. Looking at all the synergy, we could do it
together, the most obvious ones are in production. They're
obviously, now being a little bit more than a $2 billion
company we can, obviously, have economies of scale in
printing and binding. And especially people are going to
develop international export from the U.S. we do have a
better price in paper and printing outside of the U.S. But
in any case, we can have a lot of savings in production and,
obviously, in the the division costs, [unintelligible] and
transportation and because we do have a preferred supplier
with Vivendi Universal and because there's a side of the
group that we may have immediate synergy on logistics but
this amount of a total $20 million that we commit to do in
the coming 18 months. As part of synergy which is kind of
important is the whole situation of our U.S. operations and
basically this is the operation we do have in California,
but, as I say, in more than two years we would have in
software which was education and games, that's doing very,
very well, however, we may think of having the education
activity which is basically Knowledge Adventure and
educational Web surfers
reporting directly to Boston to Houghton Mifflin, that means
that we would save immediately operation in headquarters in
California. And this would amount to $20 million. And for
example we do have set forth selling educational products to
schools with Houghton Mifflin around 700 people selling to
schools and, obviously, we may have synergy, obviously, on
this kind of activity also. Last point of synergy is G&E.
Within Houghton Mifflin, Houghton Mifflin is not going to be
any more an interested company. So, that will save some
money, obviously, and Houghton Mifflin will benefit of the
support of Vivendi Universal and especially in terms of tax,
cash management and so on, so immediately we will be able to
reduce some of the costs on a corporate level and we will
save some G & E. So, this is on the cost side. On the
revenue side, obviously, we do have a lot of things to do
all together and combining our operation all over the world,
as one of the top priorities is digital television. We are a
little bit, probably a little bit more advanced in Europe in
terms of digital television. It's absolutely key for us. We
probably believe that what's a key production and
distribution is going to be the name of the game for
education and the publishing activity is going to be three
to five years. So that means that we have to be ready in
this field. That means that all the books and all the
content should be produced in a digital format. As you know,
we should agree on the digital format which is
[unintelligible] one. So, it's a key priority and in this
field we can work on a world wide basis in order not to
reinvent the wheel and not reinvent every time on digital
adaptation process. We also have immediate revenue synergy
in [unintelligible]. We do have [unintelligible] between our
publishers in Europe and South America so, this will be
expended immediately on the U.S. operations. And, obviously,
we also have a very important opportunity in content
combinations and international operations [unintelligible]
content combination. As you know, it's more and more
education in publishing is going towards customization so
it's important again in having local content, but being able
sometimes to combine some of the content even in the U.S.
basis and probably with some international content. That is
very important also Houghton Mifflin is a 97 person U.S.
company with little international exposure. We probably
believe that in the very short term, that some of the
content of Houghton Mifflin can be, obviously, be used in
South America and Europe. As a second point of revenue
synergy technology and Internet related costs what we talked
about a few minutes ago, we did invest $100 million in
education.com, our Web site. Education.com did open three
months ago in the U.S. and Germany, in England and in
France. It will open soon in Spain and in Brazil.
Education.com is going to be immediately put with Houghton
Mifflin and, obviously, we will leverage and based on what
we have been doing in education.com with Houghton Mifflin
content. On the Internet-related costs, again, Houghton
Mifflin has been invested around $100 million of last year.
It will be really good now to rationalize all the
investment, again, on the worldwide basis making sure that
we are going to use the engine or to redo education.com but
are going to use the same tools in order, again, to avoid
rebuilding engine tools and so on by country by country and
we do think that we do have immediate cost synergy but also
revenue synergy here. So, that means that we do commit to
have a $75 million synergy in the coming 18 months.
Allright, what we said early here which is very important is
acquisition will be financed by -
Messier: - - we will go back to questions I'm thinking yes because we
really need to give you the floor, and I think that's on the
strategic rationale. Perhaps you are to commence a little
bit this one and then we go to the Q and A?
Touraine: Yes. So, divesting our operation fund that means that on the
strategic basis we are going to move from a typical business
which is a magazine and trade show mostly financed by
advertising to a long-term steady growth as the education
market is growing in the U.S. around six to nine percent per
year. This is a good point, we are going to use
entertainment, and we are going to benefit from the value of
the synergy which I talked about, and even Vivendi Universal
Publishing is now completely refocused on three markets
which is education being number two world wide with 2.3
billion sales, the games activity we are number two world
wide on PC and number one world wide online with $400
million in sales and the health activity where we are a
worldwide leader with $400 million sales.
Messier: Thanks for being with us today, this morning. So, who wants
to raise the first question?
Man: What you said on the disposal of professional price is
obviously of great interest in France. So, could you give us
more detail, how much it represents, so many people with
that, and also who are you going to sell the operations to?
Are you in talks already? Thank you.
Touraine: OK, so basically, I'll answer your last question, to whom
are you going to sell?
Messier: Why not the usual answer. We sell to the best offer. Period.
Man: Do you want to make further comments on the first part of
the question?
Touraine: So, basically, we are going to divest what is called the
information division which is magazines related to a lot of
b-to-b fields like IT field, building services and so on.
Acupuncture for instance, as you know, we are going to
divest our trade shows and again our free sheets. OK. To
answer your question the free sheet activity 3,000 people
and there is activity in total in around 2,000 people. Total
is around a billion Euro activity.
Messier: I just want to add: we made disposals within the group which
has been many times over the last few years throughout
[unintelligible] which is now very close to being fully
completed. It's clear that we have as a first criteria
social consequences and the ability of making those
disposals with a great respect for any single employee
working in those activities. That's obviously no more than
before, but as much as before, first priority in any
discussions that we will conduct for these disposals, and I
assume that over the last four, five years, disposals within
Vivendi Universal's group present 25 million Euros or so.
You never heard of any social difficulty in the process of
[unintelligible] teachers. This is where we made with the
same attention in that case.
Al Klondening: All Klondening from the Associated Press. Do you have any
plans for job cuts at Houghton Mifflin. If so, how deep and
over what period of time?
Touraine: First of all, we don't have any plans. Again, what I think
is really good in this operation is really a win/win
operation. Again, we don't have any text book or school
activity in the U.S. besides, again, distributing some
CD-ROMs to schools. So, we are not merging company in the
U.S. so there is no reason to check head counts or whatever.
On the contrary, again, Houghton Mifflin will be the home of
all our education activity in the U.S. and especially having
probably, again, very [unintelligible] with Knowledge
Adventure in California and Houghton Mifflin. So, no, there
is absolutely no plans for cuts. There's absolutely no need
for cuts. The operation we do with Houghton Mifflin is here
to build, again, a number two worldwide operation and
additional publisher and with the hope to become number one,
OK, very soon. So, no, the priority is not to cut, the
priority is to develop.
Man: [unintelligible] French Newspaper. Obviously, your goal is
to become number one in this education publishing business.
How do you intend to reach that goal? Are you
thinking of further acquisitions in the U.S.? And secondly,
if I may, could you give us a price range on what you expect
from the sale of the French assets?
Messier: I'm going to answer to those questions. We will be number
two on a worldwide basis, very close to number one. That's
being really the only global multi-language educational
publisher and being the only one strong on every support
including Internet and educational software. I think that
based on this competitive advantage in terms of support and
multi-languages, we clearly hope through organic growth to
become very soon number one, but not number two, just number
one in the educational field. We intend - -
Messier: - - last piece that we were looking for in order to complete
and to have every reading skills in the parameter in the
scope of the group to be the worldwide leader in education.
On your second question, on price, I'm not going to give you
an indication because I hope that every indication that we
had in mind is going to be taking more time to skills of
[unintelligible] largely overbidded and what I can tell you
is that the idea is very simple. Through the arbitrage in
our publishing portfolio and the Vivendi Universal
portfolio, we will fully finance the acquisition of Houghton
Mifflin.
Are there questions from the floor or not?
James Harding: Hello. James Harding from the Financial Times. I have two
questions if that's OK. I just wanted to clarify, as part of
your disposal, are you also going to be selling the other
part of what you classified as the other part of Houghton
Mifflin, the consumer publishing business, and what does
that mean for the consumer publishing business if you are
for Vivendi Universal publishing? And the second question is
for Mr. Messier, you said that you've got 1.5 million users
of Vizzavi. You've committed $800 million to that. Is that a
very good new start as part of the progress of Vizzavi, and
given the efforts you're putting behind Yahoo, it suggests
that you are more enthusiastic about Yahoo than you are
about Vizzavi. Thank you.
Touraine: I'm not really sure about the difference in the question. We
don't intend to sell anything within Houghton Mifflin. If
your question is related to the trade and reference
division, obviously not. As you know, literature within CUP
as of today would be $160 million in Europe. The trade and
reference division with Houghton Mifflin is a little bit
above $100 million. We are very, very excited about joining
our forces here because, again, it is also becoming global
and I must tell you that yesterday I was with our French
trade division and they get very, very excited about it. And
the last point is the trade division within Houghton Mifflin
is doing an outstanding job and I'm sure you know better
than even me all their books and the authors, so, no there
is absolutely no point to sell the trade division. What we
sell in France is a b-to-b activity. There is no point to do
any divestment on consumer activities.
Messier: Two months ago you could say OK Vizzavi that's only 200,00
registered users, that's very disappointing. You cannot say
that anymore. A few months ago we said we do expect to have,
by summertime of 2001 two million registered users. We are
going to be well ahead of that, which means that by
summertime 2001 in terms of European registered users,
Vizzavi is going to be clearly in the top three of the
European sites, and I think you just have to look at the
figures. Just look to the take-off. Zero in December to
100,000 in January, more than 1.5 now at the beginning of
June. I think we will be close somewhere in the summertime
to 3 million registered users, and I do think that this
trend will continue with the different openings of the
different countries in Europe. So, I give you a small
roundup every three months. We give figures of penetration
growth of
Vizzavi, and I think that more and more this question about
how disappointed are you is going to disappear and you will
have more and more difficulty to ask it in the same way.
Obviously, we are very pleased and especially pleased in the
states with the relationship built with Yahoo on the music
field. We strongly believe that we can develop other
relationships with Yahoo. We strongly believe that the
distribution agreement is only a starting point which is
also showing that Yahoo is modifying its view on Internet
business models going more and more about selling content,
billing customers, offering in-subscriptions. We like that.
That's the business model we believe in the Internet field
and Yahoo is a great brand, a great community, a great
distribution access. We will take every opportunity to
develop commercial relationships with Yahoo and we will
continue to do so along with Jerry Young and Teresa
[unintelligible].
Sandra Abrams: I'm Sandra Abrams with CNN. I have a question. You've
obviously been on an acquisition spree. What's missing that
you would like to have as part of your empire. What's next
for you?
Messier: We spent three days about speaking of internal synergies and
as I said to my people ending the Orlando meeting, I'm the
happiest man on earth by sharing and managing this wonderful
group and this wonderful team. The only thing I can just
raise, look to what are Vivendi Universal's goals. We want
to be in five key entertainment fields. We want to be the
worldwide leader. Music, done. Movies, done. Games, done.
Education, thanks to Houghton Mifflin, done. Sports, thanks
to our partnership with Canal+, number one in Europe. So,
clearly from that you can assume that our first priority is
to execute this merger and the creation of Vivendi Universal
and to encourage all organic growth. Do not wait for major
acquisitions within Vivendi Universal in the coming months.
You would be disappointed.
Messier: I hope that this is, obviously, a proposed acquisition. I
think that there are two things important in the offer that
we are launching today. The first one is that the price is
the full price. A very nice price, and I think the price
which that's normal, yes, giving the true value to Houghton
Mifflin shareholders. I think that this is justified by the
fact that we clearly can bring huge synergies, $75 million
at the EBITDA level represents one fourth of the existing
EBITDA of Houghton Mifflin. So we do think that this is a
very strong proposal to Houghton Mifflin shareholders. And
the second point is that in those businesses where creation,
where teams are so important, I'm a strong believer in
friendly transactions. The fact that this transaction has
been unanimously recommended by the two boards. The fact
that we have discussions and extensive meetings with all the
management teams of Houghton Mifflin, that we feel totally
comfortable with this management team, that we get the
feeling that will show to an extent looking to the future,
not only Nader but all his team was saying if we have to
join one group one day, the best choice would be Vivendi
Universal. I think that this is also very important in order
to ensure the success. When you are buying companies whose
main assets is people, you better be friendly and welcomed,
that's the case.
Operator: Our first question comes from Daniel Golden with the Wall
Street Journal. Please go ahead with your question.
Daniel Golden: Thank you. You mentioned that Vivendi now becomes second in
the world wide educational publishing market. I was
wondering what its position will be in the U.S. market. I
don't think Houghton Mifflin is quite as high as second.
Could you say where you'll now stand in the U.S. K-12
market, in the college text book market and in the
standardized testing market in terms of market share and
relative position?
Messier: OK, the question is about our market share position in the
U.S. after this acquisition where, obviously, I think that
the answer has to be both that the U.S. market, the Spanish
market, we are number one there. English market, we're,
through Houghton Mifflin, as Nader stated we will lead
depending on the different lines of product that you
consider between number one and number four in the English
language. And school publishing we are number three. Third
largest school publisher.
D. Golden: I see.
Nader: Within that, we are number one in reading, number one in
spelling, and number three in mathematics. In secondary
school, we are third largest secondary school publisher.
However, in secondary school, we are number one in
mathematics, number one in foreign languages, number one in
literature, and number one in American history and world
history. In college, we are number, fourth largest college
publisher. However, we are at number two in the history and
number two in foreign languages, number one in introductory
mathematics and so on. So wherever we play, wherever we are,
we are either number one or number two, at minimum number
three. We have had no problem competing in the marketplace
in any of those disciplines that I mentioned. In
supplemental, we are fastest-growing, even though we are
number eight supplemental publisher. We are fastest growing
supplemental publisher in the country. When average industry
growth was 14 percent, we grew over 24 percent in the last
five years. We are third largest assessment publisher. And
there we are number two in clinical testing and number three
in standardized tests.
Messier: And we can add number two in educational software, number
one on-line offers.
Touraine: Yes, subjectively, we are combining again, Learning
Adventure and our interactive distribution. We do have more
than $200 million in the U.S. and to answer your question
really is to say that after the merger or after the
application our total revenue for education will be 50
percent in the U.S. and 50 percent in Europe and the rest of
the world. And, again, I think we're the only one, or will
be the only one, to have such a position as being able to
have operations all over the world with a very good
equilibrium between Europe, rest of the world and the U.S.
Nader: I think what is important to realize is that this
digitization that we are facing, content digitization, make
it possible for publishers to be global companies. And I
think with Houghton Mifflin joining Vivendi Universal we
will be able to take advantage of that expertise in
digitization and also their presence and visibility
internationally to take some of our contents and make it
available on line around the world.
Messier: I think that we can take perhaps another question over the
phone. And I do suggest that after Houghton Mifflin
questions if you have any other questions relating to
specifics to Vivendi Universal I would be pleased to answer
them. Can we go to the phone one more time?
Operator: Our next question comes from Greg Gatlin with the Boston
Herald. Please go ahead with your question.
Greg Gatlin: Hi, my question is for Nader. Nader, it's my understanding
that you had indicated back in December that a sale of
Houghton Mifflin was not necessarily the best way to
maximize shareholder value and I'm wondering what changed
between then and now and why the sale now?
Nada: First of all, I found that Vivendi Universal offers great
possibilities for Houghton Mifflin going forward. Secondly,
they made an offer that I thought our stockholders would be
immensely happy with. So, those two factors and the fact
that I, through my many meetings with Vivendi management and
their chairman, I came to a conclusion that their goal for
future and their commitment to quality is the same as at
Houghton Mifflin. So, those reasons were for our decision to
move forward for this possibility with Vivendi Universal.
G. Gatlin: Did you have a sense that you - - can I just follow up on
that question?
Touraine: It's going to be $2.2 billion in total. That means compared
to Vivendi Universal in total -
Messier: -- communications are going to be close to $6 million Euro -
Touraine: Yes, it's 2.2 out of 13 billion. Again, what we will have
after the completion if it happens, we will have basically
again, the education division within the VUP for 2.2, the
game division for $0.4 million and the health division for
$0.4 million. So, in total, Vivendi Universal Publishing is
going to be education. Obviously, again, activity is very,
very important for all of us, and we do have a lot of
synergies between games and education, especially on the IT
side and the [unintelligible] side for education and in the
health business we are number three or number two on a
worldwide basis. It's a very important business for us also.
So, basically, Vivendi Universal Publishing is going to be a
$3 billion Euro operation.
Messier: And on the timing, that's normal time table so we do not
expect any specific problem in specific regular
[unintelligible]. We think and we are working on the
shortest timetable as possible in that kind of situation.
Tod Hullin: Ladies and gentlemen, thank you very much.
Messier: Thank you.