Vivendi to pay Liberty Media $775 mln to settle fraud lawsuit

NEW YORK/PARIS, Feb 26 (Reuters) - Vivendi SA will pay John Malone’s Liberty Media Corp $775 million (709 million euros) to settle a lawsuit accusing the French media company of hiding a liquidity crisis while negotiating to swap its stock for Liberty’s stake in USA Networks Inc.

The accord announced on Friday would end Liberty’s nearly 13-year-old lawsuit over the companies’ roughly $10.3 billion stock-and-cash transaction, which was announced in December 2001.

In June 2012, a federal jury in Manhattan had ordered Vivendi to pay Liberty 765 million euros of damages for breach of contract and fraud.

The judge who oversaw the four-week trial later boosted the award to 944.8 million euros, including interest. A federal appeals court in Manhattan had been scheduled to hear Vivendi’s appeal of that award on March 3.

Vivendi bought USA Networks as part of former Chief Executive Jean-Marie Messier’s plan to transform his company from a water utility into one of the world’s largest media and telecommunications companies.

Liberty received a 3.6 percent Vivendi stake in exchange, only to see the Paris-based company’s share price fall more than 80 percent within eight months after the transaction was announced.

Vivendi said the settlement would have a positive net cash impact of 270 million euros ($295 million), because the payout is less than it had set aside for the litigation.

While denying any wrongdoing, Vivendi said the settlement was in its shareholders’ best interest.

Liberty, which is based in Englewood, Colorado, said it expected to receive $420 million after taxes in the settlement.

Separately, Liberty on Friday said fourth-quarter operating profit rose 5 percent from a year earlier to $217 million from $206 million, helped by growth in subscribers at satellite radio company Sirius XM Holdings Inc, which it controls.

Vivendi in 2004 sold much of its U.S. entertainment business to General Electric Co. The USA Network is now part of Comcast Corp’s NBCUniversal unit.

The case is Liberty Media Corp et al v. Vivendi Universal et al, U.S. District Court, Southern District of New York, No. 03-02175. ($1 = 0.915 euro) (Reporting by Michel Rose in Paris and Jonathan Stempel in New York; Editing by Tom Brown)