Activision Blizzard to Buy Out Vivendi's Shares

[Steven Bogos]

Activision Blizzard to Buy Out Vivendi's Shares

Once the transaction is complete, we can stop worrying about Vivendi siphoning funds from the publisher [http://www.escapistmagazine.com/news/view/126188-Vivendi-May-Be-About-To-Squeeze-Activision-Blizzard-For-Billions].

In a surprise move that is no doubt in response to the possibility of being squeezed for billions [http://www.escapistmagazine.com/news/view/126188-Vivendi-May-Be-About-To-Squeeze-Activision-Blizzard-For-Billions], Activision Blizzard announced a plan to buy back approximately 429 million shares from parent company Vivendi for $5.83 billion. When the transaction is complete Vivendi will no longer own the videogame publishing giant and its majority stock will be owned by public shareholders.

CEO Bobby Kotick and Co-Chairman Brian Kelly will separately purchase approximately 172 million shares for $2.34 billion in cash, or $13.60 per share. When it becomes independent, the company will be led by Bobby Kotick as Chief Executive Officer and Brian Kelly as Chairman. Vivendi will no longer be the majority shareholder, but will retain a stake of 83 million shares or approximately 12%.

In an official statement, Kotick said, "These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi. 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."

"The transactions announced today will allow us to take advantage of attractive financing markets while still retaining more than $3 billion cash on hand to preserve financial stability," he added.

Earlier this month, a rule [http://www.escapistmagazine.com/news/view/125723-Vivendi-May-Siphon-Funds-From-Activision-Blizzard] that required Vivendi to get permission from Activision Blizzard's directors to siphon funds from the company expired, and given Vivendi's dire financial situation, there was a very real fear that the multinational would squeeze Activision Blizzard for billions of dollars.

Source: Market Watch [http://www.marketwatch.com/story/activision-blizzard-announces-transformative-purchase-of-shares-from-vivendi-and-new-capital-structure-2013-07-25]

Permalink

 

[Souplex]

I recall saying that this is exactly what they should do when Vivendi's nefarious plans were first announced.
I do hope somebody picks up that phone...
...Because I called it!

 

[BartyMae]

Good for them. It would've probably already been money stolen from them by Vivendi, anyways. Might as well cut ties and own yourself while you're at it.

 

[Dreadman75]

Okay, good on them and all for standing up to this bullshit, but after they become their own company what's next?

Correct me if I'm wrong but before Microsoft and EA hate were the norm Activision held the ire of gamers for reasons I don't fully understand. (I never read up on them.)

My point being, after they own themselves what's to stop them from following in EA's footsteps. They'll have no more oversight, not that Vivendi was all that good in the first place. And there's no guarantee that they'll actually listen to their customers at all.

That's the big question: If this goes through, where will Activision go from there?

 

[Jak2364]

So basically the only effect this whole thing is probably going to have on us is that we're maintaining the status quo? I don't really see this changing Activision at all.

 

[Eric the Orange]

To bad they had to be strong armed into the deal. but such is the world of capitalism I guess.

Though as always I am frankly sickened by how much CEOs make that Kotick can drop over 2 Billion on stock.

 

[Ferisar]

am i the only person that looks at Blizzard and sees they basically have no new game releases lined up ?
once D3 on consoles and the last SC2 "expansion" is out there is literally nothing on their release schedule...

Because that was ever not the case, right?

Once WoW came out, we haven't heard of any new development for -ages-. This is common practice for them at this point.

Besides, Activision is the one that's pushing games out at a steady pace, Blizzard goes slow.

Oh, don't forget: Titan (at some point) and whatever WoW still has. And the SC2 expansion is still a game,

OT:
Well, I can't say I'm that happy about this. Neither outcome seemed pleasing. We either have Vivendi sucking the publisher dry or Bobby Kotick assuming direct control.

Whomp whomp.

 

[Agayek]

Okay, good on them and all for standing up to this bullshit, but after they become their own company what's next?

Correct me if I'm wrong but before Microsoft and EA hate were the norm Activision held the ire of gamers for reasons I don't fully understand. (I never read up on them.)

My point being, after they own themselves what's to stop them from following in EA's footsteps. They'll have no more oversight, not that Vivendi was all that good in the first place. And there's no guarantee that they'll actually listen to their customers at all.

That's the big question: If this goes through, where will Activision go from there?

Activision had gamer hate for a while because Bobby Kotick took over as CEO and couldn't go two weeks without coming out with some stupid PR-disaster-level comment like "I want to take all the fun out of making games" and "If a game can't be turned into a yearly franchise, it's not worth making", etc etc. Once he learned to shut up, the hate vanished as abruptly as it appeared.

 

[Strazdas]

the title is wrong. it is bobby kottic and Brian Kelly that is buying acti-blizzard, not acti-blizzard buying themselves out.
If the title were right the following argument would be true:
SO basically they are going to buy themselves out with the money that is owned by wivendi. Oh, nice, you can now buy yourself with money that you have that are legally owned by the guy that your buying yourself from. this is the highest level of corporate law douchmbaggery in a while.
essentially you got vivendy owning actibliz (and evertything in it) and actibliz using money vivendi owns to pay vivendi with their own money to buy themselves to, well, themselves.

As it is neither true nor logical, the title is wrong.[footnote]Turns out the illogical thing is true, yay for illogical business[/footnote]

I recall saying that this is exactly what they should do when Vivendi's nefarious plans were first announced.
I do hope somebody picks up that phone...
...Because I called it!

i remmeber that.

Activision had gamer hate for a while because Bobby Kotick took over as CEO and couldn't go two weeks without coming out with some stupid PR-disaster-level comment like "I want to take all the fun out of making games" and "If a game can't be turned into a yearly franchise, it's not worth making", etc etc. Once he learned to shut up, the hate vanished as abruptly as it appeared.

or, maybe, it was because activision had a huge history of either consuming a company, closing it down and firing everyone or consumign a company and that company would them end up on life support?

Too bad that Vivendi agreed to this instead of sucking them dry of all their money over a period of time.

Vivendi has been trying to sell Acit-bliz for some time now, they finally foudn a buyer.

 

[Steven Bogos]

the title is wrong. it is bobby kottic and Brian Kelly that is buying acti-blizzard, not acti-blizzard buying themselves out.
If the title were right the following argument would be true:
SO basically they are going to buy themselves out with the money that is owned by wivendi. Oh, nice, you can now buy yourself with money that you have that are legally owned by the guy that your buying yourself from. this is the highest level of corporate law douchmbaggery in a while.
essentially you got vivendy owning actibliz (and evertything in it) and actibliz using money vivendi owns to pay vivendi with their own money to buy themselves to, well, themselves.

As it is neither true nor logical, the title is wrong.

Sorry my friend, but I have to respectfully disagree. The Wall Street Journal [http://www.marketwatch.com/story/activision-blizzard-announces-transformative-purchase-of-shares-from-vivendi-and-new-capital-structure-2013-07-25] source specifically states "Activision Blizzard Announces Transformative Purchase of Shares from Vivendi"

then

"Company to Buy Back Approximately 429 Million Shares from Vivendi for $5.83 Billion"

Followed by

"CEO Bobby Kotick and Co-Chairman Brian Kelly to Separately Purchase Approximately 172 Million Activision Blizzard Shares from Vivendi for $2.34 Billion"

While it is true that Bobby and Brian will be buying a bunch of the shares, it's less than half of the total shares activision blizzard is buying. This is the exact wording the wall street journal used, so I apologize if I am wrong (because I myself know little of the stock market), but for now i'm going to trust WSJ on this one.

 

[Andy Shandy]

Good on them for going indie! =P

Seriously though, it's good that they managed to get away from Vivendi before they starting siphoning money from them, especially since Vivendi didn't particularly want them anyway.

 

[Compatriot Block]

Too bad that Vivendi agreed to this instead of sucking them dry of all their money over a period of time.
I guess it's the money they will get all at once and they wanted to get rid of Activision anyway for ~$8.1 billion a while back:
http://www.bloomberg.com/news/2012-06-29/vivendi-said-to-plan-sale-of-stake-in-activision-blizzard.html
Now they got about that in total:http://dealbook.nytimes.com/2013/07/26/activision-in-8-2-billion-deal-to-buy-back-stake-from-vivendi/

Anyway, that means that Bobby will have full control over Blizzard now (even more than he had before since they will be entirely dependent and wholly owned) and apparently Tencent, who own a minority stake in Epic Games and own Riot Games will have a large share of the new Activision too.

I'm kinda hoping that this puts them into enough debt that they won't be able to crawl out of it come "Next Gen console generation" and they die or go bankrupt like a lot of other large publishers recently.

Activision Blizzard plans to finance the deal with about $1.2 billion of cash on hand and roughly $4.6 billion of debt, raised through the markets and bank financing. The company expects to have $1.4 billion of net debt after the deal, which is expected to close by the end of September.

That's a whole lot of people who'd lose their jobs, man. A big company like that going belly-up isn't pretty for anyone who's not a higher-up, i.e. the people everyone here has problems with.

 

[Eleuthera]

In an official statement, Kotik said, ...

You missed a "c" in Bobby's name there.

OT: I doubt this will make a lot of difference to gamers, ActiBlizz was mostly drawing it's own plans anyway, though they needed to move some cash over to Vivendi every once in a while. Now they're self-owned (kinda) but they'll have to move some cash over to the banks every once in a while.

 

[Strazdas]

the title is wrong. it is bobby kottic and Brian Kelly that is buying acti-blizzard, not acti-blizzard buying themselves out.
If the title were right the following argument would be true:
SO basically they are going to buy themselves out with the money that is owned by wivendi. Oh, nice, you can now buy yourself with money that you have that are legally owned by the guy that your buying yourself from. this is the highest level of corporate law douchmbaggery in a while.
essentially you got vivendy owning actibliz (and evertything in it) and actibliz using money vivendi owns to pay vivendi with their own money to buy themselves to, well, themselves.

As it is neither true nor logical, the title is wrong.

Sorry my friend, but I have to respectfully disagree. The Wall Street Journal [http://www.marketwatch.com/story/activision-blizzard-announces-transformative-purchase-of-shares-from-vivendi-and-new-capital-structure-2013-07-25] source specifically states "Activision Blizzard Announces Transformative Purchase of Shares from Vivendi"

then

"Company to Buy Back Approximately 429 Million Shares from Vivendi for $5.83 Billion"

Followed by

"CEO Bobby Kotick and Co-Chairman Brian Kelly to Separately Purchase Approximately 172 Million Activision Blizzard Shares from Vivendi for $2.34 Billion"

While it is true that Bobby and Brian will be buying a bunch of the shares, it's less than half of the total shares activision blizzard is buying. This is the exact wording the wall street journal used, so I apologize if I am wrong (because I myself know little of the stock market), but for now i'm going to trust WSJ on this one.

Fair enough, it does seem that the company is buying itself out with money that belongs to vivendi after all. Gota love those illogical business laws.

 

[thebakedpotato]

Fair enough, it does seem that the company is buying itself out with money that belongs to vivendi after all. Gota love those illogical business laws.

Kinda sorta? While Vivendi is a major shareholder, it can't technically withdraw money unless it is disbursed through to the other shareholders. Which is what they wanted Actiblizzion to do.

I look forward to this. Whatever happens next, it won't be boring.

Also: Bloomberg link for number crunchers.
http://www.bloomberg.com/news/2013-07-26/activision-management-to-buy-vivendi-stake-for-8-17-billion.html