By Andrew Edgecliffe-Johnson in New York

Vivendi has scotched rumours that it could sell Universal Music after sealing its ?1.2bn ($1.9bn) deal for EMI?s recorded music division, as the French telecoms and entertainment group detailed plans to ?breathe new life? into the troubled British music icon.

?We haven?t grown Universal Music with two major transactions [its takeover of Bertelsmann?s music publishing division in 2006 and the EMI bid announced on Friday] just to spin it off,? Jean-Bernard L?vy, Vivendi?s chief executive, said.

Universal would raise EMI?s spending on new acts while making at least ?100m in annual savings from the combination, said Lucian Grainge, chief executive of the world?s largest music company.

He praised EMI?s resilience under the debt-laden ownership of Guy Hands? Terra Firma private equity group and then, since February, under Citigroup, which financed Mr Hands? 2007 takeover. However, he said EMI?s investment in new artists had been cut ?dramatically?.

?We?re not bankers; we?re not private equity. Music runs through our veins,? he said, adding that EMI could take a larger share of the urban music genre, and that EMI labels such as Parlophone and Capitol Records could become household names again.

Universal, which with EMI would command more than a third of global recorded music sales, must convince competition authorities from Brussels to Washington that the deal will lead to investment in the creative sector rather than giving it excessive market power.

Mr Grainge said the music market had ?shattered? in the past five years, as Mr L?vy added that he was confident of getting approval for the EMI deal. Vivendi is expected to argue that the combination of endemic piracy and increasingly powerful digital distributors such as Apple have weakened major labels? power.

The EMI auction highlighted the turmoil in traditional financing markets since Citi began the process in June. Universal beat Warner Music, owned by Len Blavatnik?s Access Industries, while a Sony consortium financed by funds from Abu Dhabi and Malaysia beat BMG, the Bertelsmann-KKR joint venture, with a $2.2bn bid for EMI Music Publishing.

Vivendi was attracted by ?the limited competition from people who would have needed a lot of bank financing?, Mr L?vy said, noting that it had been able to tap long-term financing secured after it bought Vodafone?s 8bn euros ($11bn) stake in SFR in April.

Vivendi said on Friday it would sell 500m euros of non-core Universal assets to stay within its triple-B credit rating, but Mr L?vy said the disposals could yield more than that sum.

Vivendi remained committed to owning both telecoms operators, such as SFR in France and GVT in Brazil, and entertainment assets, including Activision video games and the Canal+ pay-television platform, he said. ?We are determined to stay at the same time a content and a platform company,? he added. ?It is a good differentiator.?

? The Financial Times Limited 2011