Vivendi to acquire Activision, create new video game giant
Vivendi SA said Sunday that it plans to acquire a controlling stake in Activision Inc. and combine the company with Vivendi Games, a deal that would create a rival to Electronic Arts Inc. as the world's largest video game publisher.
The combination of Santa Monica, Calif.-based Activision, whose titles include Guitar Hero, Call of Duty and the Tony Hawk series, and Vivendi Games, which publishes Crash Bandicoot and owns the online role-playing franchise World of Warcraft, would create the world's largest pure-play online and console game publisher, the companies said.
Vivendi Games will convert its equity into Activision shares valued at $8.1 billion US, and Vivendi will buy an additional $1.7 billion of stock, for a total of $9.8 billion, giving Vivendi a 52 per cent stake in a new company to be called Activision Blizzard. On that basis, Activision and Vivendi valued the combined company at $18.9 billion.
"This transaction has always stuck out as the way to become the number one most successful video-game publisher," Activision chief executive Bobby Kotick said in an interview.
Vivendi's Irvine, Calif.-based Blizzard Entertainment is behind the top multiplayer online role-playing game franchise, World of Warcraft, which the company said has more than 9.3 million subscribers worldwide.
Blizzard's Warcraft and Diablo series are two of the bestselling video game lines of all time.
Competition for EA
Jean-Bernard Levy, chairman and chief executive officer of Vivendi, pledged the deal "will unlock the value of Blizzard."
Said Jeff Brown, spokesman for Electronic Arts: "We wish them luck. We look forward to the competition and believe that EA still has the strongest portfolio of perennial game franchises."
Kotick, who will stay on as president and CEO of the new company, said the deal had been in negotiations since January.
Under the agreement, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock at a price of $27.50 per share, for a value of $8.1 billion, the companies said in a statement.
Vivendi, based in Paris,also will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share, or $1.7 billion, giving Vivendi its 52 per cent stake.
Deal expected to close in 2008
Activision Blizzard will continue to operate as a public company traded on the Nasdaq Stock Market under the ticker ATVI.
After the transaction closes, expected in the first half of 2008, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 each.
Vivendi also has agreed to acquire an additional $700 million of newly issued Activision shares, giving Vivendi about a 68 per cent stake in Activision Blizzard if the tender offer is fully subscribed.
The offer price is a 24 per cent premium to Activision's closing price Friday of $22.15 per share.