Activision Blizzard to Buy Out Vivendi's Shares

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Activision Blizzard to Buy Out Vivendi's Shares

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Once the transaction is complete, we can stop worrying about Vivendi siphoning funds from the publisher.

In a surprise move that is no doubt in response to the possibility of being squeezed 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 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

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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!

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.

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?

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.

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.

Now I wonder if this will have Mr Bobby run Activision and Blizzard into the ground or if he'll somehow manage to turn things around. I suppose we'll see how it eventually turns out, but I doubt it'll go well for Blizzard regardless.

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.

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...

Sleekit:
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, :P

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.

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?

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.

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.[1]

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!

i remmeber that.

Agayek:
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?

Dexter111:
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.

[1] Turns out the illogical thing is true, yay for illogical business

Ferisar:
snip

firstly titan has been completely scrapped. there are PR releases saying they have restarted its development but as an entirely new game yes but you are talking years of development wasted and years of development ahead before they produce something new and that's a very large hole in their previously planned release schedule and business plan.

secondly titan, D3, and the 3 SC2s where all announced as up and coming titles on a staggered release schedule shortly after the Activision merger and at this point that load has been fired (baring the last SC2).

there is nothing else on their release schedule (barring two rumoured D3 expansions which may or may not be bullshit and that are unlikely to generate much enticement even if they do exist) and wow is dying (albeit slowly) and is slowly but clearly laying the groundwork to change its business model (ie go F2P) at a later date something it was probably meant to do when titan launched.

edit - oh and there's "blizzard all-stars" because ofc the world needs more F2P DOTA clones...

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 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.

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.

Dexter111:
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.

Compatriot Block:
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.

I'd see it as a best-case scenario. Certain big publishers like Activision or EA are not much more than a cancerous growth on the gaming industry. If they were gone, other companies would fill that latent demand and might even make some good games or try to do some different games for a while to top it off. Some of the other "big publishers" managed to do that too, while Activision mainly manages to capitalize on the Call of Duty and Skylanders franchises with a few shitty license games thrown in here and there.
I wrote this about 3 years ago and while their PR people managed to produce less eye-gouging quotes they haven't much changed anything about their business model since then: http://www.teamliquid.net/forum/viewmessage.php?topic_id=128252

I think "some people would (temporarily) lose their jobs." isn't a good excuse to not wish giant gluttonous behemoths that will buy and spit out hundreds if not thousands of people by buying and closing studios every year anyway and actively harming the industry with their practices long-term lose their heads.

Steven Bogos:

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.

Steven Bogos:

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 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.

Strazdas:
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

thebakedpotato:

Strazdas:
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

Following all accounting measurements, vivendi technocally owns 63% of blizzard assets, and that includes 63% of money they are using to buy themselves out. unless you are implyign that they are buying 63% with money from 37% and still ahve 3 billions (thats 36% of the money they are already paying, so 63% turns 36%?). so yeah, they are still paying vivendi with the money vivendi owns.
technically it can say "were closing doors today" and being major shareholder they can then split thier 63% cut. while granted its assets and its market share may be vastly different, they can extract money.
Then again activision is funding it with 4.6 debt. so this may jstu as well be the other shareholders money and technically not vivendis own money. but we are really trying to pull a fast one with this logic.

Jeesus.. look at the numbers being thrown around here.. and all that almost exclusivly from world of warcraft....

No wonder everyone and their grandmother wanted a piece of that fat cake with their own WoW clones....

Surprised Disney weren't in for ActiBlizzard.

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?

Kotick used to be the gaming devil, but it's been over a year since he said/did anything terrible. It's probably his coworkers helping him to mellow out, but probably he just learned to bite his tongue. There's only space for one devil, so why cling to Koticktivision when EA is such an easier target right now?

As for what they do now? Vivendi was a major conglomerate and considered ActiBlizz too small to really care about. I bet that some of what Kotick used to say came from those guys. Now that the game company will be run again strictly by more gamey people there's a decent hope they'll start to focus on better games instead of better money suckers.

It's extremely optimistic, but I totally see Blizzard's philosophy having a positive effect on the Activision upper management.

Sleekit:

there is nothing else on their release schedule (barring two rumoured D3 expansions which may or may not be bullshit and that are unlikely to generate much enticement even if they do exist) and wow is dying (albeit slowly) and is slowly but clearly laying the groundwork to change its business model (ie go F2P) at a later date something it was probably meant to do when titan launched.

Diablo 3 has 1 million unique players per day, 3 million per month, and a total possible recidivism pool of 12 million players. I don't think they'll have a problem drumming up interest in D3 expansions.

Edit: Realized your argument wasn't about money, so edited out the irrelevant parts. As for their Valve-esque creeping development pace? Good. Blizzard is known for being anal about their games[1] and I'd have it no other way. We could use a couple more examples of developers that give that much of a shit. Most developers probably don't have that luxury, but it's nice to see one that does actually use it.

[1] Even scrapping entire operational games just because it didn't meet their expectations

Now I have to decide what to do with my stock...been sitting on it waiting for it to get above 16 before selling but it's up over 17 now. Have to wonder if it goes up some more and stabilizes or if it's gonna drop.

THANK GOODNESS OUR CALLADUDY AND DIABLOS ARE SAFE.

Good. I mean Activision is the suck and Blizzard is holding on to old IP nostalgia to hold afloat, but...fuck Vivendi. Fuck them and fuck their greedy malpractices. And I'm glad Acti-Blizz are out of this poisonous leech of a relationship.

This is a healthier outcome for the gaming industry. So... Yeah. Good.

Sleekit:
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...

Thats pretty par for the course for blizzard. They dont exactly crank out titles. Not counting expansion packs they've released 3 games in the last 11 years; 2 of those in the last 3. WoW represents a massive, ongoing investment of resources to maintain and expand. Even as massive as blizzard is its basically a given that they won't return to anything resembling a "normal" development schedule until WoW is dead and gone. (so basically never)

Imagine how risk-adverse Activision (already the CoD factory) would have become if Vivendi forced the bloodletting. The last thing the game industry needs is the prospect of corporate raiders.

Side note: if I were a Vivendi shareholder my first question would be, "So how did this company get to the point where we had to sell off the only part making money BECAUSE IT WAS MAKING TOO MUCH MONEY?"

I was going to say that I was hoping that Activision would fold, but then I realized that the company isn't even relevant enough for me to hate. EA gains my ire chiefly because they publish, ruin and then doom developers and titles I actually like. The last Activision game that even popped up on my radar was Prototype back in 2009. Okay, maybe Blizzard gets some fist shaking for Diablo 3 and the fractured release of Starcraft 2, but I don't really like RTS or clickfest(have no idea what they're actually called) games anyway, so it was mostly the story I was looking forward to on those.

So I guess.... meh?

Fraggy1:
Surprised Disney weren't in for ActiBlizzard.

They've been buying a lot of late so guess they're out of loose change... but seriously... don't encourage them god help us the resultant mega corp could threaten the free world.

But on topic i'm pleased that they Bliz/act is safe may not always produce games i want desperately but there is enough i care about and a hell of a lot of jobs at stake.

LordMonty:

Fraggy1:
Surprised Disney weren't in for ActiBlizzard.

They've been buying a lot of late so guess they're out of loose change... but seriously... don't encourage them god help us the resultant mega corp could threaten the free world.

But on topic i'm pleased that they Bliz/act is safe may not always produce games i want desperately but there is enough i care about and a hell of a lot of jobs at stake.

Disney isn't in the market for making games. They see it as too high risk of an investment with thin profit margins for AAA titles. That is why they gutted LucasArts and are content to license out their IP's.

walrusaurus:

Thats pretty par for the course for blizzard. They dont exactly crank out titles. Not counting expansion packs they've released 3 games in the last 11 years; 2 of those in the last 3. WoW represents a massive, ongoing investment of resources to maintain and expand. Even as massive as blizzard is its basically a given that they won't return to anything resembling a "normal" development schedule until WoW is dead and gone. (so basically never)

They will have to provide an heir to the WoW-throne eventually and sooner rather than later as WoW's subscriber numbers continue to erode. It's a powerful revenue stream, but it's not 'invincible' anymore.

Sleekit:
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...

Hearthstone, it is generating a ton of buzz for a free-2-play game, even outside traditional gaming circles, due out by the end of the year.
WoW Expansion 5 is being announced in November
and then there is Titan probably being announced in November, but they said possibly 2014 before any real announcements.

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