Taxman Slaps $2.7bn Demand on Vivendi

03 April 2003

Vivendi Universal faces a new blow to its attempts to stabilise its finances in the shape of a $2.7 billion (€2.5bn; £1.7bn) tax bill.

The sum relates to a 1995 deal in which US chemicals group DuPont bought 156 million of its own shares from Canadian conglomerate Seagram. DuPont paid $7.7bn in cash for the stock plus $700m in warranties.

However, the US Internal Revenue Service has queried Seagram’s tax payments connected with the deal and wants an extra $1.5bn in tax plus $1.2bn in interest. As Seagram was purchased in 2000 by Vivendi, the latter must foot the bill.

Vivendi – which has been rapidly shedding assets to avoid a cash crunch – has appealed to the IRS against the demand, but says it has made preparations to meet the payment if necessary.

Data sourced from: Financial Times; additional content by WARC staff