Vivendi and Activision in video game merger

Source: Exec Digital USA

Date :03/12/2007 09:45:07

Vivendi Games a unit of theFrench entertainment and telecoms group is to merge with Nasdaq-listed Activision in an $18.9 billion global deal.

Blizzard Entertainment, Vivendi’s games division – maker of the World of Warcraft series which has 9.3 million subscribers -will merge with Activision to create an enlarged company called Activision Blizzard.

Gaming rival

The newly-merged company could overtake Electronic Arts(EA) as the world’s biggest video game developer by revenue, with combined 2007 revenues of around $3.8 billion.

EA, by contrast, is expected to generate about $3.9 billion in revenue for the fiscal year ending in March, according to consensus estimates.

Vivendi will inject its games unit into Activision at a value of $8.1 billion and will purchase $1.7 billion worth of Activision shares for $27.50 each, giving it 52 percent of the new company.

This could rise to 68 percent if a tender for $4 billion of Activision shares is fully taken up.

Paving a deal

The new deal is subject to regulatory clearance however Jean-Bernard Levy, Vivendi’s chairman and chief executive does not expect any major issues.

He added that talks the two parties began talks in January about a possible deal.

"As we began to talk, we realized we had these incredible synergies and a common belief on how the market would evolve," said California-based Activision Chief Executive Bobby Kotick.

Kotick will run the combined company as CEO, while Vivendi Games CEO Bruce Hack, will serve as vice chairman and chief corporate officer.

Activision makes games for consoles including Sony’s Playstation 3 and Microsoft’s Xbox 360.

It is best-known for its game Guitar Hero where players plug a plastic guitar into their screens and strum along to popular songs.

December 3, 2007