Activision Blizzard splits from parent company Vivendi in $8.17bn buyout

Activision Blizzard and a group led by chief executive Bobby Kotick have agreed to buy out most of Vivendi’s stake in the biggest US video-game publisher for $8.17bn (€6.15bn), ending five years of control by the French media and telecommunications company.

Blizzard Entertainment, which is a subsidiary of Activision Blizzard, employs around 600 people at a customer support centre in Co Cork which works mainly with the company’s World of Warcraft title.

The maker of Call of Duty and World of Warcraft will take on debt to purchase shares held by Paris-based Vivendi for $5.83bn in total. Kotick and his partners, who include co-chairman Brian Kelly, Chinese video- game publisher Tencent Holdings, Davis Advisors and Leonard Green & Partners, will pay $2.34bn.

The transactions end months of uncertainty for California-based Activision by making it an independent company again. Vivendi, which will be left with a 12% stake, gets cash to repay debt and prevent further rating cuts as chairman Jean- Rene Fourtou pares assets to restore investor confidence.

“We tried to construct a transaction that rewarded our public shareholders and this structure accomplishes that,” Kotick said in a telephone interview.

Activision said on Feb 7 that it may consider stock buybacks, dividends, acquisitions or other unusual transactions to return cash to shareholders. Vivendi has been seeking ways to extract cash, including discussions of a buyback or dividend.

Last year Vivendi canvassed possible buyers for its 61% Activision stake.Microsoft and Walt Disney were among those that have passed.

Kotick’s group and Vivendi weren’t able to strike an deal earlier this year because of differences in price.

With Activision shares trading above $15 the past two weeks, a compromise was possible that allowed Vivendi to get cash and still retain a minority stake, while Activision was able to buy out the stock at a discount.

Activision Blizzard was the result of a 2008 merger after Vivendi agreed to contribute its $8.1bn video- game business and pay $1.7bn in cash in exchange for control of the entity it combined with Activision Inc. to surpass Electronic Arts, the market leader at the time.

Activision has increased revenue every year since the transaction. Its $4.9bn in 2012 sales compared with $3.8bn for Electronic Arts’s most recent financial year.

Activision plans to fund the buyback with $1.2bn in cash and about $4.6bn in debt financing, according to the statement.

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