A legendary Canadian business dynasty will fade into history today when the current keeper of the keys, Edgar Bronfman Jr., hands them over to Vivendi SA, a French conglomerate run by a former civil servant and investment banker.
The boards of Seagram Co. Ltd., Vivendi and its entertainment arm, Canal Plus SA, yesterday approved a three-way merger that will leave the Bronfman family with 8 per cent of the stock in what will be known as Vivendi Universal -- by far the largest shareholding in the widely held company -- and five of 20 board seats.
The all-stock deal, which values Seagram at about $33-billion (U.S.), will be unveiled at a press conference in Paris this morning by Vivendi chief Jean-Marie Messier and Mr. Bronfman, Seagram's chief executive.
If approved by shareholders and regulators, the three-way merger could be completed before the end of the year.
The combined company will be based in Paris, and once Seagram's famous liquor business is sold off as planned, most of its remaining Canadian ties will go with it.
The high price being paid for Seagram in one of the world's biggest media mergers will go a long way toward vindicating Mr. Bronfman's troubled six-year stewardship of the Montreal-based company and his efforts to transform it into an entertainment powerhouse, analysts and industry participants say. It will also help free him from the heavy burden of having to live up to the ghost of his fabled grandfather, Samuel Bronfman, a bold, brilliant and ruthless businessman who launched the family fortune by shipping booze to the thirsty U.S. market during Prohibition.
Samuel Bronfman's bootlegging customers included the likes of Meyer Lansky, Frank Costello and other notable gangsters of the Roaring Twenties.
Once liquor became legal again in the United States, Mr. Bronfman made even more money through his business prowess and skillful acquisition or development of some of the world's finest brands.
Well before his death in 1971, he had built brands such as Chivas Regal, Crown Royal, VO and Seagram's Gin into global leaders, and extended the family holdings into oil, shipping and commercial real estate.
By the late 1960s, the family was the biggest landowner in Canada.
Charles Bronfman, one of Samuel Bronfman's sons who remained in Montreal until finally growing tired of the Quebec separatist threat a few years ago, also became one of the country's most noted philanthropists. He remains so today, even though he now resides in New York, Palm Beach and Jerusalem, where he oversees his expanding Israeli industrial holdings.
Brother Edgar married into upper crust New York society and has been a U.S. citizen since the 1950s. Edgar Jr., was raised in the United States and briefly in England. His main connection to Canada has been the yearly pilgrimage to Montreal for the company's annual meeting -- one he has made since becoming president in 1989 and later replacing his father as CEO in 1994.
Directors of Vivendi and Canal Plus, Europe's biggest pay-television operator, quickly approved the deal that will bring an end to Seagram. Seagram's board, which met throughout the weekend and yesterday, took longer.
Technical legal issues, rather than price or division of responsibilities, caused the delay, said sources familiar with the discussions.
Mr. Bronfman, 45, along with his father -- Seagram chairman Edgar M. Bronfman -- and his uncle, co-chairman Charles Bronfman, are expected to occupy three of the five seats allotted to Seagram. But they will have nowhere near the clout that made the Canadian clan and the company with which they were indelibly linked world renowned.
In exchange for turning over the 24-per-cent-owned family heirloom that made billionaires of three generations of Bronfmans, Mr. Bronfman will get the No. 2 executive job in an international communications and entertainment colossus that will rank among the world's top five media companies. It will have combined annual revenue of more than $65-billion.
Mr. Bronfman aspired to turn Seagram itself into just such a global giant, when he acquired a major Hollywood studio in 1995 for $5.7-billion and followed that in 1998 with the blockbuster $10.4-billion purchase of the world's biggest record company, PolyGram NV.
But Seagram's track record in the tough movie business was poor, as the company's Universal Studios turned out such money-losing dogs as Babe: Pig in the City and Meet Joe Black. It has done much better with music, but was ordained to be a second-tier player, a destiny unsuitable for Mr. Bronfman, who had vowed that he would not preside over the shrinking of the family billions entrusted to his care.
Although it is not clear how much real power he will exercise in what, after all, is someone else's company, Mr. Bronfman -- an occasional writer of pop songs -- is slated to be in charge of the two areas he likes best: music and new technologies.
The demise of the Seagram name means nothing on Wall Street. There, analysts and fund managers talk only of share values, synergies and short-term performance.
They like the merger because Vivendi is handing over stock worth about $75 a Seagram share, a fat premium above the high-$40s range at which Seagram traded before news of their marriage talks leaked out.
Shareholders with little sense of history or sentiment will like the deal too.
"It's a great deal for shareholders," said Barry Hyman, senior market analyst with Ehrenkrantz King Nussbaum Inc. in New York. "Wall Street wants to see this deal happen."
But Mr. Bronfman has admitted to mixed feelings about selling the family legacy and with good reason.
"He had this sense of manifest destiny, of wanting to prove something to his father and grandfather," a former business associate said. "I think that's what this whole thing has been about for the last five years."
THE SEAGRAM EMPIRE: FROM HOOCH TO HOLLYWOOD
Joseph Seagram appreciator of fine whiskeys and race horses, sold the 71-year-old family business in 1928.
Sam Bronfman bootlegged Seagram into Prohibiiton-era U.S. and never looked back.
Sam's youngest son Charles ran Canadian operations, owned the Montreal Expos. Sam's eldest son Edgar was president of the World Jewish Congress.
Edgar Bronfman Jr. gave up a career as movie producer, but led Seagram to buy a Hollywood studio.
Distilled: The Bronfman family emerges from merger with 8 per cent of Vivendi Universal. Edgar Jr. becomes No. 2 executive.
-*** Seagram now ...
$12.3-billion
Based on 1999 revenues for each company. ($U.S.)
Theme parks $0.8B Music $3.8B Movies $2.9B Liquor $4.8B
and merged with Vivendi: $54.8-billion Beverages, utilities and other:..$35.7B
Communications: $8.8B Music: $3.8B Entertainment: $6.1B
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