Activision to Split from Vivendi in $8 Billion Deal (UPDATED)
UPDATE (7/26/2013 7:00 AM PDT): USA Today reports that shares of Activision surged this morning in pre-market trading to $17.98, a 20 percent jump.
This just in. And seriously, just. After a tumultuous week that saw the strong possibility that Vivendi would extract a $3 billion dividend from subsidiary Activision Blizzard in an attempt to manage its (Vivendi’s) enormous debts, Activision has struck a deal to go it alone. In an announcement released late this evening, it was confirmed that Activision Blizzard will buy out Vivendi’s stake in the gaming juggernaut in a deal worth approximately $8.3 billion.
In the deal, Activision will purchase approximately 429 million shares, the majority of Vivendi’s stake in the publisher, for $5.83 billion. At the same time, a consortium of investors led by Activision Blizzard CEO Bobby Kotick, operating under the investment vehicle ASAC II LP, will buy another 172 million shares from Vivendi for $2.34 billion. This will leave Vivendi with an approximately 12 percent share of the company. Both transactions value Activision Blizzard’s stock price at $13.60 per share.
That’s interesting information: at the close of regular trading today, Activision Blizzard stock was valued at $15.18 per share. Note, however, that in its press release Activision Blizzard stated that projected earnings per share won’t be affected.
Eagle-eyed readers will recognize this as the confirmation of rumors that accompanied the report from earlier this week, which held that Kotick wanted to take Activision Blizzard solo. No doubt the agreement was made possible in part because Vivendi itself had already considered selling the Call of Duty publisher off last year, also due to the company’s significant debts.
We can only speculate, but the late announcement tonight is almost certainly due to negotiations which have been ongoing since the original report broke on Tuesday. In the end, the $8 billion being paid out to Vivdeni had to be worth it to avoid being bled regularly to pay off Vivendi’s vig.
Click the next page to read the full press release.