Activision buys independence for $8.2b
Vivendi SA is selling most of its majority stake in Activision Blizzard for US$8.2 billion (NZ$10 billion), giving the video game company back its independence as the French conglomerate tries to strengthen its balance sheet.
Vivendi said on Friday that 429 million of its shares will be sold to Activision itself for US$5.83 billion, or US$13.60 per share. Another 172 million shares will be sold for US$2.34 billion to a consortium of investors including Activision CEO Bobby Kotick and Co-chairman Brian Kelly, who are contributing US$100 million each.
Santa Monica, California-based Activision makes games such as World of Warcraft and the wildly popular Call of Duty series. Vivendi acquired a majority stake in Activision in 2008 and combined it with its games unit, which included Warcraft publisher Blizzard Entertainment, so Activision will walk away a bigger company.
Vivendi, meanwhile, will reduce its stake in Activision to 12 per cent. The French company will continue to hold 83 million Activision shares after the sale, which is expected to close in September.
Activision's newly found independence will come ahead of an important holiday season for video game companies. New consoles from Microsoftand Sony coming out later this year are expected to fuel video game sales starting this fall and through the holidays.
Activision said in a conference call with investors on Friday that this is a "tremendous" opportunity for the company and its shareholders. The move will reduce the number of available shares Activision has, which will increase the value of its remaining stock.
"Five years ago, we made one of the best decisions in our company's history when we joined forces with Blizzard Entertainment," Kotick said in the call. Since then, Activision has launched new games including Diablo III and the kid-focused Skylanders.
After Friday's announcement, investors can shift their focus to Activision's games, including the upcoming Destiny from Halo creator Bungie that could be a "major hit" when it comes out next year, said Cowen and Co analyst Doug Creutz.
Vivendi, whose shares closed up less than 1 per cent to €16.07 in trading in Paris, said in a statement that the sale "provides the group with greater financial flexibility and creates value for our shareholders".
Part of the cash will be used to strengthen the balance sheet and maintain its credit rating. Vivendi has been trying to restructure and sell off some businesses in its diverse conglomerate, and announced earlier this week that it's in talks to sell its stake in Moroccan phone company Maroc Telecom.
Shares of Activision jumped US$2.28, or 15 per cent, to close at US$17.46. The company's stock hit US$17.76 earlier in the day, its highest level since August 2008.