Santa Monica-based Activision, Inc., one of the world’s leading independent publishers of interactive entertainment, will combine with French company Vivendi to form the world’s largest pure-play online and console game publisher. The companies announced a “definitive agreement” on Sunday, December 2.
Vivendi will own approximately 52 percent of the restructured Activision, to be renamed Activision Blizzard, and Robert Kotick, Activision’s Chairman and CEO, will stay on as president and CEO. It will continue to operate as a public company traded on NASDAQ under the ticker ATVI.
Kotick said, “This is an outstanding transaction for Activision and our stockholders, as well as a pivotal event in the continuing transformation of the interactive entertainment industry. By combining leaders in mass-market entertainment and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences.”
Vivendi Games, Vivendi’s interactive entertainment business, includes Irvine-based Blizzard Entertainment, which publishes World of Warcraft, the leading multi-player online role-playing game franchise. Activision is best known for the games Guitar Hero, Call of Duty, and the Tony Hawk series, as well as Spider-Man, X-Men, Shrek, James Bond, and TRANSFORMERS.
The companies described the transaction in a press release: “Under the terms of the agreement, Vivendi Games will be merged with a wholly owned subsidiary of Activision. In the merger, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock. Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games. Concurrently with the merger, Vivendi will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share – a premium of 31 percent to Activision’s average closing price over the past 20 trading days – for a total of $1.7 billion in cash. As a result of these transactions, Vivendi will own an approximate 52 percent ownership stake in Activision Blizzard on a fully diluted basis.”
After closing the transaction, Activision Blizzard will launch a tender offer to purchase Activision Blizzard common shares at $27.50 per share. In addition, Vivendi has agreed to acquire from Activision Blizzard additional newly issued shares. Depending on the extent of tender offer subscription, Vivendi could own up to an approximate 68 percent stake in Activision Blizzard on a fully diluted basis.
Jean-Bernard Lévy, Chairman of the Management Board and Chief Executive Officer of Vivendi stated: “In Activision, we have found a partner with a highly complementary business and strong operating team. Bobby Kotick and Brian Kelly are industry pioneers, well known for creating shareholder value. The combined strength of the existing management teams at both companies will set the stage for further profitable growth of Activision Blizzard.”
Activision, founded in 1979, is headquartered on Ocean Park Boulevard and conducts operations worldwide with more than 2,000 employees.
The corporate combination announced December 2 will set the stage for further competition in the interactive entertainment business between the new Activision Blizzard and Entertainment Arts down the street in Playa Vista.