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NOW IT'S M'SOFT-Microsoft interested in

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NOW IT'S M'SOFT

By TIM ARANGO and ERICA COPULSKY

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April 12, 2003 -- Microsoft has expressed interest in buying Vivendi's Universal Music Group, setting up a possible bidding war between the software maker and rival Apple Computer, according to sources familiar with the matter.

Microsoft's interest is said to be at the level of "poking around, kicking the tires," but it has indeed had conversations with Vivendi executives about buying the music division, sources said.

The unit is the world's largest record company.

The music and technology worlds were abuzz yesterday after a published report revealed that Apple, and its technology maven CEO Steve Jobs, is weighing a bid for Universal Music.

For some in the beleaguered music industry - which has seen compact disc sales plummet in recent years due to rampant piracy - the prospect of a tech giant like Apple or Microsoft delving into the music business is an affirmation that it is possible to make digital downloading profitable.

"It would be a great shot in the arm for the music industry," one music industry insider said.

Another industry veteran said, "It's wonderful when someone like Steve Jobs - who is generally viewed as a visionary and a futurist - has a genuine interest in music as an investment at a time when everyone is running scared from the music business."

Jobs began meeting with Vivendi officials last October about possibly investing in Universal Music, according to sources familiar with the matter.

While he initially considered buying just a piece of the business, he has now decided he wants to buy the entire division, sources say.

These people say the deal is a long shot, but Jobs is likely to submit a bid worth between $5 billion and $6 billion. Vivendi has said it hopes to raise at least $7 billion from asset sales this year.

A bid at such a price would be an admission that the value of the business has fallen sharply in recent years.

Universal Music was cobbled together from several investments over recent years, with the total invested far greater than $6 billion. In 1995, Seagram - which was eventually bought by Vivendi - purchased record label MCA for $2 billion. Later, in 1998, it bought PolyGram for almost $11 billion.

Universal Music may be too big a bite for Apple to take on its own.

With Apple's market value at just under $5 billion, sources say the company will likely have to bring in private equity firms to back its deal.

Apple has held talks with firms Thomas H. Lee Partners, Kohlberg Kravis Roberts & Co. and Blackstone Group about making a strategic investment in the computer maker to help finance its deal.

But even with help from the buyout firms, sources say it will still be tough for Apple to buy the entire unit.

Apple's interest is said to be stronger than Microsoft's - but Microsoft might intensify its interest as an April 29 Vivendi board meeting approaches. At that meeting, Vivendi is expected to weigh a variety of proposals for selling its U.S. entertainment assets, which include a movie studio, theme parks and television properties.

Representatives of Universal Music and Vivendi declined comment. Spokespersons for Apple and Microsoft did not return calls seeking comment.

The only other known bidder for Universal Music is an investment group led by billionaire oilman Marvin Davis. This group is bidding close to $15 billion for a majority stake in Vivendi's entire entertainment division, and reportedly will withdraw from the process if the music unit is sold to another party.

Representatives for Davis declined comment.

http://www.nypost.com/business/33958.htm

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Which one of the bidders is most likely to reissue te Argo/Cadet catalog?

Bertrand.

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Jesus! Gates couldn't come up with an original idea to save his life. :rolleyes:

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Man he really does steal everything from Jobs, doesn't he?

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