Report: Vivendi Planning To Force $3B Dividend From Activision

Activision Blizzard may be in for a fight with parent company Vivendi SA, as the French multimedia giant has devised a plan to pay down part of its enormous debt using money from the Call of Duty publisher’s assets.

Vivendi currently has a staggering $17.3 billion in outstanding debts, severely complicating plans to spin off sections of the company and focus on its various media enterprises. As part of the effort to resolve this issue, The Wall Street Journal reports that Vivendi is considering voting to extract a $3 billion dividend from Activision Blizzard. The move would provide Vivendi, which owns 61 percent of the publisher, with $2.3 billion. The plan will be presented today during a meeting of Vivendi’s Board of Directors.

This could create serious complications for Activision Blizzard, aside from the matter of deducting nearly half of the company’s cash on hand. Activision reported over $4 billion in cash assets for the fiscal year ending last March, but half of that amount is held in offshore accounts, in order to shield the company from substantial US taxes. If Activision Blizzard accesses the money in order to pay the dividend to Vivendi, those taxes will have to be paid, likely after the money has changed hands. If so, the publisher might be forced to take on new debt itself in order to pay out the dividend.

You’ll recall that just last year, Vivendi was planning to deal with its debt by selling its stake in Activision Blizzard. At the time, we noted that the sale would have given Vivendi a one-time infusion of cash, but would have done nothing to address the company’s larger woes. With Activision Blizzard’s profitability undisputed, it would appear that Vivendi has decided instead to bleed, rather than kill the golden goose.

This puts Activision Blizzard in a difficult position, which explains why there is a corresponding rumor that CEO Bobby Kotick wants to buy out Vivendi’s stake in the company himself. Unfortunately, multiple reports suggest Vivendi isn’t open to that option. And while Activision Blizzard’s Board of Directors will have to approve the dividend payment, Vivendi’s majority stake makes passage of the deal likely.

We are reaching out to Activision Blizzard for comment, and will update this story as it develops.

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7 Comments on Report: Vivendi Planning To Force $3B Dividend From Activision

Kakyo01

On July 22, 2013 at 3:31 pm

there’s a reason why I hate the current system and this is a good example… even if a company works good and has no problems itself it can get into trouble if another company decides it wants some money back (especially if they want it “now”)

the chart house system works well until the one at the very bottom starts to loose its footing… it’ll drag all the other cards with it (or at least create damage to the buildings structure on the way)

Kevin

On July 22, 2013 at 4:45 pm

Reason number 5 billion we should have a territorial tax system instead.

Axetwin

On July 23, 2013 at 12:24 am

I can’t help but wonder of Activision is going to capitalize upon this opportunity to buy itself back from Vivendi.

Ron Whitaker

On July 23, 2013 at 6:24 am

@Axetwin – I heard that they were considering it, but it would involve either taking on new debt (which Kotick has proven loathe to do), or repatriating some of their offshore cash, which would entail a fairly hefty tax payout.

I think that it will happen eventually, as Activision needs to get out from under the crushing weight of Vivendi.

SupremeAllah

On July 23, 2013 at 7:32 am

” Activision reported over $4 billion in cash assets for the fiscal year ending last March, but half of that amount is held in offshore accounts, in order to shield the company from substantial US taxes. ”

This stuff right here makes me sick. Take all their money.

It’s bad enough when you hear about wealthy individuals doing this, and its the type of thing you’d expect from a company like Haliburton. But even if crappy video game companies are doing it now too, then screw em. If Vivendi fell over 16B in debt it is clearly their fault, but let em take some of that Activision cash. They’d been milking the idiot populous for years with their rehashed Call of Garbage games, they deserve to have that money taken from them and used to pay off a sliver of that euro debt!

Ross Lincoln

On July 23, 2013 at 8:21 pm

“This stuff right here makes me sick. Take all their money.”

Supreme, I’m (obviously, I hope) inclined to feel similarly, but it would be a shame if Activision Blizzard, Vivendi’s only really successful possession, ends up “having” to lay a bunch of people off because Vivendi can’t handle its bidness.

lol

On July 24, 2013 at 3:25 am

lol. Like anyone cares about this except 30 year old 400lb virgins who eat Cheatos for every meal. As long as I can still play Black Ops 2 multiplayer I don’t care and neither does 99% of gamers.