Activision Blizzard buys itself from Vivendi for $8.2 billion

By on July 26, 2013, 10:30 AM
blizzard, activision, vivendi, activision blizzard

Media giant Vivendi held a majority stake in Activision Blizzard up until today, with the gaming company announcing that they will be buying a portion of Vivendi's stake to regain majority control. The buyback will cost around $8.2 billion: $5.83 billion will be in cash for 429 million shares, while a further 172 million shares will be bought for $2.34 billion by an investment group headed by co-chairman Brian Kelly and CEO Bobby Kotick.

Vivendi will retain an approximately 12% stake in the gaming giant - around 83 million shares - with Bobby Kotick continuing his role as CEO and Brian Kelly taking a sole chairman's role. The deal is expected to close in September 2013, according to the press release from the now independent Activision Blizzard.

Kotick stated that since Activision merged with Blizzard five years ago, "we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders", while also thanking Vivendi for their partnership through the period. Now that Activision Blizzard is an independent company, Kotick says that "a best-in-class franchise portfolio" along with a focus on driving long-term shareholder value will "expand our leadership position as one of the world's most important entertainment companies."

The company is best known for producing the World of Warcraft and StarCraft series under the Blizzard label, and Call of Duty under the Activision label. The latter title is responsible for a large amount of Activision Blizzard's revenue, which is reported to be $1.05 billion for the second quarter alone; their full-year revenue outlook has been raised as a result, and will be announced in August.




User Comments: 8

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Burty117 Burty117, TechSpot Chancellor, said:

Does this mean we'll see any better games though? What does activision blizzard gain from this?

2 people like this | lawfer, TechSpot Paladin, said:

Does this mean we'll see any better games though? What does activision blizzard gain from this?

Vivendi is in, if I recall correctly, upwards of 15 billion in debt. Since Vivendi owns Activision by owning I think it was around 70% of shares, they were planning on taking Activision's cash reserve to pay off little over half of their debt. While a good thing for Vivendi, this would have meant Activision wouldn't enjoy the financial stability to produce and market games, especially with Gen 4 around the corner. It would have been pretty bad for them.

So essentially what Kotick did was, make Activision buy about 88% of Vivendi's shares, leaving Vivendi with about 12% ownership, or for all intent and purposes, nothing. This means Activision is now its own boss, leaves Activision with about 3 billion in cash reserve, and Vivendi can use the cash it got from the sale to pay off its debt.

tonylukac said:

$8.2 billion! Lots of money in games.

Classified1 said:

Activision ruins games, enough said.

treetops treetops said:

Thank you for making diablo 3, a console port that took 2 years to reach consoles.

Skidmarksdeluxe Skidmarksdeluxe said:

Kotick's still around? Damn, I remember he used to open his mouth just to change feet. I would've thought he'd be on pension by now.

St1ckM4n St1ckM4n said:

[...] this would have meant Activision wouldn't enjoy the financial stability to produce and market games, especially with Gen 4 around the corner. It would have been pretty bad for them.

Okay, so it would have been bad for Activision. However, now it's even worse for games.

With a large cash reserve, they can now sit high and happy while they blow money on ridiculous advertising campaigns for their next clone of COD24.

If they lost their nice reserve, they'd be forced to actually make a decent game.

lawfer, TechSpot Paladin, said:

Okay, so it would have been bad for Activision. However, now it's even worse for games.

With a large cash reserve, they can now sit high and happy while they blow money on ridiculous advertising campaigns for their next clone of COD24.

If they lost their nice reserve, they'd be forced to actually make a decent game.

Activision doesn't "make" games, so I don't know what you're talking about. They publish (as in fund, package, and market) games. Most developers (the ones that make the games) have complete control over successful franchises, that's why BF will never be like CoD, even though it could, theoretically speaking, make EA more money.

Also, CoD alone is multi-billion dollar franchise (franchise, not *just* a game), meaning at best--if worst comes to worst--EA could maybe, just maybe scrape together the money for it and keep it afloat. But what will happen to the rest? If Activision were to fall, the are other franchises that could be lost in an auction if no bids are placed.

Meaning that World of Warcraft, Diablo and Starcraft could be lost or brought by other publisher with studios with different vision. That's also not to mentioning the smaller other IP that Activision's studios and their subsidiaries own.

And that's not even the most important thing.

The biggest issue is the loss of industry revenue, as less games means less money spent at GameStop and other retailers, consequently leading to lost jobs and downsizing. It means consoles have less variety of titles and perhaps less people playing games; it means financial institutions are less willing to give money to developers because the titan of the industry collapsed, and of course worst of all: hundreds or perhaps a couple of thousand very talented workers across the world would likely not have replacement jobs in the industry without having to move to new parts of their respective countries or even around the world.

If someone as big as Activision falls, every developer, gaming outlet, and gamer feels the effect because it sets a precedent and leaves people out of work. It wouldn't kill the industry--far from it--but it could seriously dampen the outlook of the industry and its creativity for years to come.

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