Fri, Jul 26, 2013 | 11:44 BST
Activision Blizzard forks out $8 billion to split from Vivendi
No publisher in the world is big enough to buy Activision Blizzard – except Activision Blizzard.
What the actual?
I know, right?
Vivendi previously owned 61% of Activision Blizzard, giving it the controlling stake. It now holds just 12%.
Activision Blizzard will purchase 429 million shares in itself for $5.83 billion.
ASAC II LP, a group led by Activision Blizzard CEO Bobby Kotick, purchased 172 million shares for $2.34 billion. It holds a 24.9% stake.
There is now no majority shareholder; Activision Blizzard is independent and answerable to public shareholders.
In a surprise twist to Vivendi’s ongoing efforts to leverage its 61% stake in Activision Blizzard, the twin publisher has announced it will purchase its own stock from its parent company.
Activision Blizzard has arranged to buy back around 429 million shares and “certain tax attributes” for $5.83 Billion to effectively sever its connection to the French-based conglomerate.
In addition to Activision Blizzard’s purchase, ASAC II LP – which is led by CEO Bobby Kotick and Co-Chairman Brian Kelly, who fronted $100 million of their personal funds – will secure a further 172 million shares for $2.34 billion in cash. ASAC II LP members include Chinese games publisher Tencent as well as financial firms.
In total, the two deals are worth $8.17 billion, and account for 602 million shares at $13.60 each.
Once the deal has been processed, Activision Blizzard will be an independent company, answerable in the majority to its shareholders. Vivendi will retain 83 million shares, a stake of around 12%. ASAC II LP will own around 24.9%.
Kotick will remain as CEO, and with Vivendi’s board members exiting, colleague Kelly will become the sole chairman.
“These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi,” Kotick said.
“We should emerge even stronger – an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world’s most important entertainment companies.”
Activision Blizzard is handing over $1.2 billion of domestic cash on hand and approximately $4.6 billion of debt proceeds, net of fees and upfront interest to fund the deal. It will retain $3 billion in cash on hand.
The deal should be complete by September.
Vivendi has been trying to offload Activision Blizzard for some time; although the twin publisher is profitable, the international company is going through a drastic restructuring to reduce its debts, shedding profitable and unprofitable division alike to double down on its core interests.
When Vivendi began looking for buyers, it couldn’t find a taker; as analysts said, there’s no company with enough cash to purchase Activision Blizzard that has the capacity to run it. Well – there’s one, obviously. Seems obvious in hindsight.
The purchase comes as something of a surprise but may explain persistent rumours of a Vivendi cash-grab on Activision Blizzard.
In case you’ve been under a really large rock, Activision Blizzard publishes Call of Duty, Skylanders, World of Warcraft, StarCraft and Diablo, among other properties. It is considered one of a handful mega-publishers, alongside EA, Ubisoft, and platform holders.