Vivendi to Acquire a Controlling Stake in Activision

Gotenks · 12-02-2007, 09:25 AM

Read it here.

http://www.nytimes.com/2007/12/03/te...vision.html?hp

SAN FRANCISCO, Dec. 2 — In a deal that creates the biggest independent video game publisher in the world, Vivendi announced Sunday it plans to acquire a controlling stake in Activision.

Under the arrangement, the companies said Vivendi would pay $1.7 billion in cash and fold its games operations into Activision’s. The deal will leave Vivendi with a 68 percent share of the combined company, to be called Activision Blizzard.

The companies said the new entity would continue to trade publicly on Nasdaq. Blizzard Entertainment is the name of the most successful game studio in Vivendi’s game operations.

Under the deal, Vivendi, based in Paris, will pay $27.50 a share for Activision, a 24 percent premium over Friday’s close of $22.15.

The deal combines companies with different areas of strength in the booming video game business. Activision’s emphasis is on making games for consoles, like the Sony PlayStation 3 and Microsoft Xbox 360. Its game franchises include the Tony Hawk skateboarding games, the Call of Duty war game series and one of the industry’s current best sellers, Guitar Hero, which allows players to strum along on a plastic guitar to tunes played on the television.

Vivendi’s strength is in online multiplayer games, such as World of Warcraft, which has more than nine million players worldwide.

The two companies said that their combined revenue for the 2007 calendar year would be $3.8 billion. The new entity will surpass Electronic Arts, with revenue of $3.1 billion, as the largest video game publisher in the world that is not affiliated with a console maker, like Microsoft or Nintendo. The two companies said they expected operating income for the new company of $1.1 billion, or $1.20 a share, in the 2009 calendar year and also said it would have the highest profit margins in the industry.

In the merger, expected to be completed in the first half of 2008, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock, a transaction that values Vivendi Games at $8.1 billion. Vivendi will also buy 62.9 million newly issued shares of Activision for $1.7 billion in cash.

The two companies also said that within five business days after closing the transaction, Activision Blizzard would begin a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 a share. If the tender offer is fully subscribed, Vivendi said it would own 68 percent of Activision Blizzard on a fully diluted basis.

Despite Vivendi’s taking the larger stake in the new company, Robert A. Kotick, chief executive of Activision, will remain as chief executive of the combined companies. Bruce Hack, the chief executive of Vivendi Games, will become vice chairman and chief corporate officer and lead the merger integration as well as head finance, human resources and legal functions, the two companies said.

Even as the deal puts Activision Blizzard in the top spot in terms of revenue, the question that will face investors is whether Activision can duplicate the business model of Electronic Arts.

Electronic Arts has built its business on creating numerous game franchises that deliver reliable streams of annual revenue. For instance, in its 2007 fiscal year, the company had 24 titles that sold more than a million copies each, and four games — Madden NFL 07, Need for Speed Carbon, FIFA 07, and The Sims 2 Pets — that sold more than five million copies.

It has done that, in part, by buying studios with popular games. Compared with its competitors, Electronic Arts has invested relatively heavily in the new platforms of casual and mobile games, and popular multiplayer games, industry analysts said. The investments have yet to pay off, but if they do, they could be a big boost to Electronic Arts, analysts said.

In recent years, there have been many examples of major publishers’ buying video game development studios. But the Activision Blizzard merger represents a substantially more significant deal, and one with immense stakes. The video game software industry is poised for a record year, driven by the recent introduction of the PlayStation 3, Nintendo Wii and Xbox 360 game consoles.

But the industry also needs companies to create hits and be able to sustain them. Mr. Kotick has said he is eager for Activision to catch Electronic Arts and become the largest video game company. “By joining forces with Vivendi Games, we will become the immediate leader in the highly profitable online games business and gain a large footprint in the rapidly growing Asian markets, including China and Korea, while maintaining our leading operating performance across North America and Europe,” Mr. Kotick said in a statement Sunday morning.

Activision, based in Santa Monica, Calif., has been an industry darling of late, in large part because of the popularity of Guitar Hero III, the latest iteration of the franchise. It was introduced on Oct. 28, and sold 1.3 million copies within seven days. Through October, Activision had three of the eight best-selling games in the United States this year, according to NPD Group, which compiles sales data.

Activision’s sales and stock have risen with the momentum. The company’s revenue for the 2007 fiscal year was $1.5 billion, a 74 percent increase from 2003. During that same period, Electronic Arts’ revenue rose 25 percent to $3.1 billion. This year, Activision’s stock is up about 28 percent to $22, while E.A.’s is up 13 percent. And since March 2003, Activision’s shares are up nearly sixfold from $3.68 (on a split-adjusted basis).

But even as Activision has been on a roll, industry analysts have questioned whether it can build the kind of library of franchises to compete with Electronic Arts. The addition of Vivendi Games gives Activision access to Vivendi’s portfolio of multiplayer games.

Mr. Kotick also said that because Vivendi owns the Universal Music Group, the transaction “will benefit Guitar Hero and further extend our sizable leadership position in music-based games.”

Szlia · 12-02-2007, 09:36 AM

I like how the Blizzard guys have nothing to do with all of this but have a brand name so strong their parent company take it for them!

Erumaron · 12-02-2007, 09:44 AM

I hear they're gonna make a Guitar Hero MMO. You run around having rock offs to gain exp.

Ziggurat · 12-02-2007, 10:06 AM

This is fucking insanity.

xilsharn · 12-02-2007, 10:16 AM

Quote:

Originally Posted by Ziggurat

This is fucking insanity.

THIS

IS

SPARTA

torrent495 · 12-02-2007, 10:21 AM

Interesting.

RiskyChris · 12-02-2007, 10:28 AM

Oh golly, Activision Blizzard? Disgusting.

Mist · 12-02-2007, 10:29 AM

Well its better than them being bought by EA.

Mkopec1 · 12-02-2007, 10:33 AM

WoW ported to xbox 360 within a year or two, maybe 3 if blizz does it.

Regime · 12-02-2007, 10:35 AM

Quote:

Originally Posted by Erumaron

I hear they're gonna make a Guitar Hero MMO. You run around having rock offs to gain exp.

No thanks...

I will settle with there best game ever

Ortega · 12-02-2007, 04:00 PM

Wow ATVI is going to be the it stock in a year or two.

vouskaine · 12-02-2007, 04:23 PM

maybe this will turn it around for activision blizzard

vouskaine · 12-02-2007, 04:24 PM

on a side note their newest title for the DS was announced, duty craft.
has 10 perifrials and comes with a collectors ball cap.

Cybsled · 12-02-2007, 06:42 PM

Blizzard has posted their FAQ/reply to the matter

FAQ:
WoW Forums -> Activision Blizzard FAQ

Quote:

Q: What are the details of the deal?
A: Under the terms of an agreement with Vivendi, Blizzard and the other companies that make up Vivendi Games will combine with Activision to form a new public company called Activision Blizzard. We do not anticipate any difference in Blizzard’s operations as a result of the combination. Joining forces with Activision will create a stronger and more diversified company that we anticipate will benefit and strengthen both brands.

Q: What will happen to the Blizzard brand name?
A: The Blizzard brand name will stay the same as it’s always been: Blizzard Entertainment, Inc.

Q: What will change with regard to the day-to-day operations at Blizzard?
A: There will be no changes in the way Blizzard operates. All of the people, processes, and philosophies that have made Blizzard so successful will be preserved. Blizzard will benefit from all-star sales and distribution teams to service our products. In addition, the combined company will be stronger financially, managerially, and operationally.

Q: How will this impact Blizzard’s games?
A: This will not impact Blizzard’s games. We remain committed to providing the same high-quality game content and support that we always have. Development on Wrath of the Lich King and StarCraft II, as well as on our unannounced games, is continuing as normal.

Q: Will there be any visible differences in Blizzard’s logo or packaging/marketing materials as a result of this deal?
A: No, there won’t be any changes to our company name, logo, packaging/marketing materials, or anything else along those lines.

Q: Will there be any management changes at Blizzard as a result of this deal?
A: No, there won’t be any management changes at Blizzard as a result of the combination.

Q: Will Activision and Blizzard now share development teams?
A: No, both of our companies will continue to operate as they have previously with regard to game development.

Q: Will the release schedules for any Blizzard games be impacted?
A: No, the transaction will not have any impact on our games, our day-to-day operations, or our release timelines.

Q: Will any of Blizzard’s offices close as a result of the deal? Or, will any new offices open?
A: No, all of our offices will continue to function as they have, and we don’t foresee the need to open any new offices for the time being.

Q: Will any employees move to different offices as a result of the deal?
A: We don’t anticipate making any such moves as a result of the deal.

Q: Does this deal include Activision’s and Blizzard’s international offices?
A: Yes, every part of our companies in the U.S. and abroad is involved in this deal.

Q: If Activision Blizzard is a public company, does that mean I’ll now be able to buy stock in Blizzard?
A: Activision will be renamed Activision Blizzard, Inc and will continue to be a publicly listed company traded on NASDAQ. You will be able to buy stock in the combined company.

Q: When will the transaction be complete?
A: The transaction is subject to approval of Activision shareholders, customary closing conditions, and regulatory approvals. Pending approval, the companies expect the transaction to be completed by mid 2008.

Dokomo · 12-02-2007, 08:12 PM

Well, this could give geeks a damn good reason to put money in the stock market. Think of how much it will go up when SC2 is released in Korea kekeke.

12-02-2007, 09:25 AM	#1 (permalink)
Gotenks Registered User Join Date: Jan 2002 Location: Chandler, AZ Posts: 33 -5 Internets	Vivendi to Acquire a Controlling Stake in Activision Read it here. http://www.nytimes.com/2007/12/03/te...vision.html?hp SAN FRANCISCO, Dec. 2 — In a deal that creates the biggest independent video game publisher in the world, Vivendi announced Sunday it plans to acquire a controlling stake in Activision. Under the arrangement, the companies said Vivendi would pay $1.7 billion in cash and fold its games operations into Activision’s. The deal will leave Vivendi with a 68 percent share of the combined company, to be called Activision Blizzard. The companies said the new entity would continue to trade publicly on Nasdaq. Blizzard Entertainment is the name of the most successful game studio in Vivendi’s game operations. Under the deal, Vivendi, based in Paris, will pay $27.50 a share for Activision, a 24 percent premium over Friday’s close of $22.15. The deal combines companies with different areas of strength in the booming video game business. Activision’s emphasis is on making games for consoles, like the Sony PlayStation 3 and Microsoft Xbox 360. Its game franchises include the Tony Hawk skateboarding games, the Call of Duty war game series and one of the industry’s current best sellers, Guitar Hero, which allows players to strum along on a plastic guitar to tunes played on the television. Vivendi’s strength is in online multiplayer games, such as World of Warcraft, which has more than nine million players worldwide. The two companies said that their combined revenue for the 2007 calendar year would be $3.8 billion. The new entity will surpass Electronic Arts, with revenue of $3.1 billion, as the largest video game publisher in the world that is not affiliated with a console maker, like Microsoft or Nintendo. The two companies said they expected operating income for the new company of $1.1 billion, or $1.20 a share, in the 2009 calendar year and also said it would have the highest profit margins in the industry. In the merger, expected to be completed in the first half of 2008, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock, a transaction that values Vivendi Games at $8.1 billion. Vivendi will also buy 62.9 million newly issued shares of Activision for $1.7 billion in cash. The two companies also said that within five business days after closing the transaction, Activision Blizzard would begin a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 a share. If the tender offer is fully subscribed, Vivendi said it would own 68 percent of Activision Blizzard on a fully diluted basis. Despite Vivendi’s taking the larger stake in the new company, Robert A. Kotick, chief executive of Activision, will remain as chief executive of the combined companies. Bruce Hack, the chief executive of Vivendi Games, will become vice chairman and chief corporate officer and lead the merger integration as well as head finance, human resources and legal functions, the two companies said. Even as the deal puts Activision Blizzard in the top spot in terms of revenue, the question that will face investors is whether Activision can duplicate the business model of Electronic Arts. Electronic Arts has built its business on creating numerous game franchises that deliver reliable streams of annual revenue. For instance, in its 2007 fiscal year, the company had 24 titles that sold more than a million copies each, and four games — Madden NFL 07, Need for Speed Carbon, FIFA 07, and The Sims 2 Pets — that sold more than five million copies. It has done that, in part, by buying studios with popular games. Compared with its competitors, Electronic Arts has invested relatively heavily in the new platforms of casual and mobile games, and popular multiplayer games, industry analysts said. The investments have yet to pay off, but if they do, they could be a big boost to Electronic Arts, analysts said. In recent years, there have been many examples of major publishers’ buying video game development studios. But the Activision Blizzard merger represents a substantially more significant deal, and one with immense stakes. The video game software industry is poised for a record year, driven by the recent introduction of the PlayStation 3, Nintendo Wii and Xbox 360 game consoles. But the industry also needs companies to create hits and be able to sustain them. Mr. Kotick has said he is eager for Activision to catch Electronic Arts and become the largest video game company. “By joining forces with Vivendi Games, we will become the immediate leader in the highly profitable online games business and gain a large footprint in the rapidly growing Asian markets, including China and Korea, while maintaining our leading operating performance across North America and Europe,” Mr. Kotick said in a statement Sunday morning. Activision, based in Santa Monica, Calif., has been an industry darling of late, in large part because of the popularity of Guitar Hero III, the latest iteration of the franchise. It was introduced on Oct. 28, and sold 1.3 million copies within seven days. Through October, Activision had three of the eight best-selling games in the United States this year, according to NPD Group, which compiles sales data. Activision’s sales and stock have risen with the momentum. The company’s revenue for the 2007 fiscal year was $1.5 billion, a 74 percent increase from 2003. During that same period, Electronic Arts’ revenue rose 25 percent to $3.1 billion. This year, Activision’s stock is up about 28 percent to $22, while E.A.’s is up 13 percent. And since March 2003, Activision’s shares are up nearly sixfold from $3.68 (on a split-adjusted basis). But even as Activision has been on a roll, industry analysts have questioned whether it can build the kind of library of franchises to compete with Electronic Arts. The addition of Vivendi Games gives Activision access to Vivendi’s portfolio of multiplayer games. Mr. Kotick also said that because Vivendi owns the Universal Music Group, the transaction “will benefit Guitar Hero and further extend our sizable leadership position in music-based games.”

12-02-2007, 09:36 AM	#2 (permalink)
Szlia Conquest Join Date: Mar 2002 Location: Switzerland Posts: 5,612 +25 Internets	I like how the Blizzard guys have nothing to do with all of this but have a brand name so strong their parent company take it for them! __________________ -retrosabotage-

12-02-2007, 10:28 AM	#7 (permalink)
RiskyChris Safety Dance Join Date: Nov 2004 Location: West Lafayette Posts: 5,702 -1 Internets	Oh golly, Activision Blizzard? Disgusting. __________________

12-02-2007, 10:33 AM	#9 (permalink)
Mkopec1 Registered User Join Date: Jul 2002 Location: Detroit Posts: 5,221	WoW ported to xbox 360 within a year or two, maybe 3 if blizz does it. __________________ When I am working on a problem I never think about beauty. I only think about how to solve the problem. But when I have finished, if the solution is not beautiful, I know it is wrong.

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12-02-2007, 09:44 AM	#3 (permalink)
Erumaron yeap yeap Join Date: Mar 2003 Location: Yardley, PA Posts: 1,361	I hear they're gonna make a Guitar Hero MMO. You run around having rock offs to gain exp.

12-02-2007, 10:06 AM	#4 (permalink)
Ziggurat Oldschool Join Date: Jan 2002 Posts: 345 +5 Internets	This is fucking insanity.

12-02-2007, 10:21 AM	#6 (permalink)
torrent495 Registered User Join Date: Sep 2006 Posts: 150 +0 Internets	Interesting.

12-02-2007, 04:00 PM	#11 (permalink)
Ortega Registered User Join Date: Feb 2006 Posts: 221 +5 Internets	Wow ATVI is going to be the it stock in a year or two.

12-02-2007, 04:23 PM	#12 (permalink)
vouskaine Registered User Join Date: Apr 2007 Posts: 52 -30 Internets	maybe this will turn it around for activision blizzard

12-02-2007, 04:24 PM	#13 (permalink)
vouskaine Registered User Join Date: Apr 2007 Posts: 52 -30 Internets	on a side note their newest title for the DS was announced, duty craft. has 10 perifrials and comes with a collectors ball cap.

12-02-2007, 08:12 PM	#15 (permalink)
Dokomo Registered User Join Date: Feb 2002 Location: Buffalo Grove, IL Posts: 1,290 -18 Internets	Well, this could give geeks a damn good reason to put money in the stock market. Think of how much it will go up when SC2 is released in Korea kekeke.