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Activision + Vivendi = Activision Blizzard

Old 12-02-07, 11:42 AM
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Activision + Vivendi = Activision Blizzard

Megaton. Looks like Electronic Arts just dropped a spot.

SANTA MONICA, Calif. & PARIS--(BUSINESS WIRE)--Activision, Inc. (NASDAQ: ATVI) and Vivendi (Euronext Paris: VIV) today announced that they have signed a definitive agreement to combine Vivendi Games, Vivendi's interactive entertainment business -- which includes Blizzard Entertainment’s® World of Warcraft®, the world’s #1 multi-player online role-playing game franchise -- with Activision, creating the world’s largest pure-play online and console game publisher. The new company, Activision Blizzard, is expected to have approximately $3.8 billion in pro forma combined calendar 2007 revenues and the highest operating margins of any major third-party video game publisher. On closing of the transaction, Activision will be renamed Activision Blizzard and will continue to operate as a public company traded on NASDAQ under the ticker ATVI.

Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top-selling franchises, including Guitar Hero®, Call of Duty® and the Tony Hawk series, as well as Spider-Man™, X-Men™, Shrek®, James Bond™ and TRANSFORMERS™. Blizzard Entertainment, a division of Vivendi Games, has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit. Blizzard owns the #1 multi-player online role-playing game franchise, World of Warcraft, which currently has over 9.3 million subscribers worldwide. Blizzard’s World of Warcraft, Warcraft®, StarCraft® and Diablo® games account for four of the top-five best-selling PC game titles of all time. Vivendi Games also owns popular franchises, including Crash Bandicoot™ and Spyro™. Pro forma for calendar 2007, Activision Blizzard expects to generate approximately 70% of its revenues from owned franchises. As a result of the business combination, Activision Blizzard expects to have the most diversified and broadest portfolio of interactive entertainment assets in its industry, positioning the combined company to capitalize on the continued worldwide growth in interactive entertainment.

Jean-Bernard Lévy, Chairman of the Management Board and Chief Executive Officer of Vivendi stated: “This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector. By combining Vivendi’s games business with Activision, we are creating a worldwide leader in a high-growth industry. We are excited about the opportunities for Activision Blizzard as a broader entertainment software platform. We believe this transaction will create significant value for Activision Blizzard and Vivendi stockholders. In Activision, we have found a partner with a highly complementary business and strong operating team. Bobby Kotick and Brian Kelly are industry pioneers, well known for creating shareholder value. The combined strength of the existing management teams at both companies will set the stage for further profitable growth of Activision Blizzard. We look forward to being an active and supportive majority stockholder in a company that is poised to lead the worldwide interactive entertainment industry in the years ahead.”

René Penisson, Member of the Management Board of Vivendi and current Chairman of Vivendi Games, added: “We are very confident that by combining forces, Activision Blizzard will set the highest standards in quality, reputation and profitability, and will bring together the best creative teams in the industry. The combination of this unique product portfolio with highly professional employees gives us great confidence in the growth prospects for Activision Blizzard.”

Said Robert Kotick, Activision's Chairman and Chief Executive Officer: “This is an outstanding transaction for Activision and our stockholders, as well as a pivotal event in the continuing transformation of the interactive entertainment industry. By combining leaders in mass-market entertainment and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences. 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. Activision stockholders will benefit from significantly increased earnings power and the recurring nature and predictability of subscription-based revenues, while also having the opportunity, if they choose, to receive $27.50 per share for a portion of their shares in the post-closing tender offer.”

Kotick continued: “Vivendi Games provides Activision with unique strategic and financial benefits and will allow us to leverage our franchises into emerging online opportunities as Blizzard has done so successfully. Activision has been very focused on margin expansion, and this transaction will meaningfully increase our overall operating margins as we expand our franchises online and in new geographies. Diversifying our revenue base among subscription-based online, console and PC formats, as well as wireless and casual emerging opportunities, gives us the broadest platform to capitalize on industry growth. With Blizzard’s successful franchises, such as World of Warcraft, StarCraft and an exciting pipeline of yet-to-be announced titles, Vivendi Games’ and Blizzard’s management team will join with Activision’s strong and experienced leaders to become an even more powerful force for innovation in online and offline interactive entertainment across a wide range of platforms. This transaction also provides a unique relationship with Universal Music Group – the world’s largest music company – which will benefit Guitar Hero and further extend our sizable leadership position in music-based games.”

Mike Morhaime, President and Chief Executive Officer of Blizzard, added: "Blizzard's industry-leading PC games business, with a track record of nine consecutive bestsellers and a global subscriber base of more than 9.3 million World of Warcraft players, is an exceptional fit for Activision's highly profitable console games business. From our interactions with the Activision team, it is clear we have much in common in terms of our approaches to game development and publishing. Above all, we are looking forward to continue creating great games for Blizzard gamers around the world, and we believe this new partnership will help us to do that even better than before.”

Structure & Terms of Transaction

Under the terms of the agreement, Vivendi Games will be merged with a wholly owned subsidiary of Activision. In the merger, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock. Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games. Concurrently with the merger, Vivendi will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share – a premium of 31% to Activision’s average closing price over the past 20 trading days – for a total of $1.7 billion in cash. As a result of these transactions, Vivendi will own an approximate 52% ownership stake in Activision Blizzard on a fully diluted basis.

Within five business days after closing the transaction, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. The tender offer will be funded by Activision Blizzard’s cash on hand at closing, including the $1.7 billion in cash received from the Vivendi share purchase. In addition, Vivendi has agreed to acquire from Activision Blizzard additional newly issued shares for up to an additional $700 million of Activision common stock at $27.50 per share, the proceeds of which would also be used to fund the tender offer. Any remaining funds required to complete the tender offer will be borrowed by Activision Blizzard from Vivendi or third-party lenders. If the tender offer is fully subscribed, Vivendi will own an approximate 68% ownership stake in Activision Blizzard on a fully diluted basis.

The transaction is expected to be immediately accretive in its first year post-closing for Activision’s stockholders and slightly accretive for Vivendi’s stockholders. Activision Blizzard is targeting pro forma operating income of $1.1 billion and pro forma earnings per share (EPS) in excess of $1.20 in calendar year 2009. The transaction is expected to be at least $0.20 accretive to Activision stockholders in calendar year 2009.
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Old 12-02-07, 12:18 PM
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While I'm not too keen on big companies swallowing up little ones, at least Activision is completely 100% different than EA. They don't churn out the same crap year after year.
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Old 12-02-07, 01:01 PM
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Check it out. Front page material. www.latimes.com

I think this mega-merger will be interesting to watch. Both companies make some high-quality stuff, so hopefully this won't affect the overall qualities of the games. Funny, I still remember supporting Activision when they were putting out the best games on the 2600 and everyone was still buying Atari's crap instead. I never understood that; I'd eagerly await the next Activision title instead. How far they've come.
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Old 12-02-07, 01:14 PM
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Originally Posted by Deftones
While I'm not too keen on big companies swallowing up little ones, at least Activision is completely 100% different than EA. They don't churn out the same crap year after year.
Tony Hawk, perhaps? And I'm sure Guitar Hero will be quick to follow as well. EA's put out quite a few titles this year that I'm more than happy with. skate. is a phenomenal title and a vastly different experience than the Tony Hawk games. Orange Box is arguably the more bang for your buck of any games out this year. And of course Harmonix's Rock Band, which is Game of the Forever, as far as I'm concerned.
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Old 12-02-07, 02:26 PM
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Originally Posted by Shagrath
Tony Hawk, perhaps?
I don't play the Tony Hawk games. However, I do recall they aren't the same as Madden in that it's the same game, with limited changes. The Tony Hawk games are similar, but they offer some new innovation. I could be wrong, but at least that's my impression when reading previews/reviews of the games.
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Old 12-02-07, 02:28 PM
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Originally Posted by Decker
Check it out. Front page material. www.latimes.com
I think it's news because both are headquartered in Los Angeles, IIRC.
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Old 12-02-07, 02:53 PM
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Can't wait for Neversoft to be handed the development reigns on the next WoW expansion.
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Old 12-02-07, 03:02 PM
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While it's fun to talk about crossovers, keep in mind this really doesn't change anything on Blizzard's end. Same autonomy that there is/was under Vivendi. Blizzard as a whole as far as production and development won't change
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Old 12-02-07, 03:08 PM
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Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top-selling franchises, including Guitar Hero®, Call of Duty® and the Tony Hawk series, as well as Spider-Man™, X-Men™, Shrek®, James Bond™ and TRANSFORMERS™.

Originally Posted by Deftones
While I'm not too keen on big companies swallowing up little ones, at least Activision is completely 100% different than EA. They don't churn out the same crap year after year.
Does not compute.
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Old 12-02-07, 03:37 PM
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I always roll my eyes when I pop in a new game and the Activision logo comes up. I have to prepare myself for the mediocrity.
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Old 12-02-07, 05:30 PM
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Originally Posted by PopcornTreeCt
I always roll my eyes when I pop in a new game and the Activision logo comes up. I have to prepare myself for the mediocrity.
May I introduce you to :
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Old 12-02-07, 05:41 PM
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Blizzavision
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Old 12-02-07, 05:52 PM
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Activizzard
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Old 12-02-07, 06:48 PM
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Q and A with Mike Morhaime on the Blizzard end of things

http://games.ign.com/articles/839/839007p1.html
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Old 12-02-07, 07:11 PM
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Originally Posted by Decker
May I introduce you to :
Never played it. I'll have to check it out.
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Old 12-02-07, 07:21 PM
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Actiblizzion?
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Old 12-02-07, 08:09 PM
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Originally Posted by The Bus
Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top-selling franchises, including Guitar Hero®, Call of Duty® and the Tony Hawk series, as well as Spider-Man™, X-Men™, Shrek®, James Bond™ and TRANSFORMERS™.



Does not compute.
You may have a point with the Spiderman games, but name one of those games above that is the exact same version of the game the year before it, with minimal changes like EA does with Madden?
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Old 12-02-07, 11:54 PM
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Yeah, the first few Spider-Man games were actually pretty good. X-Men Legends have been solid games too.
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Old 12-03-07, 08:50 AM
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Megaton? I don't think I own a single game from either company.
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Old 12-03-07, 09:35 AM
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Rumors that EA will combat this move by making a bid for Ubisoft.

From Bloomberg :

Ubisoft Entertainment SA, Europe's second-largest maker of video games, surged the most in a year in Paris trading on speculation that Electronic Arts may bid for the company as a result of the Vivendi-Activision deal.

Electronic Arts, maker of the ``Madden NFL 08'' and ``NFL Football 08'' games, owns 15.4 percent of Ubisoft stock and has 24.9 percent voting rights. Ubisoft, based in the Paris suburb of Montreuil-sous-Bois, described the investment as ``hostile'' when Electronic Arts bought the shares in 2005.

Ubisoft rose 2.19 euros, or 3.7 percent, to 61.70 euros at 1:45 p.m. in Paris. The stock climbed as much as 11 percent, the biggest advance since Dec. 7, 2006. Ubisoft spokesman Emmanuel Carre couldn't be reached to comment on the stock's move.

Last edited by aktick; 12-03-07 at 09:47 AM.
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Old 12-03-07, 10:13 AM
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Originally Posted by PixyJunket
Megaton? I don't think I own a single game from either company.
That's too bad, because Warcraft II, Warcraft III, Starcraft, Diablo, Diablo 2, Half-life (originally published by Vivendi), Half Life 2, were all awesome games by Vivendi. Vivendi also published one of the few good Simpsons games.
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Old 12-03-07, 10:30 AM
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all I have to say is *sigh
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