Computer games giants to merge

Two computer games giants today announced plans to merge to create the world’s largest computer games publisher.

The $18.9bn deal will see French firm Vivendi Games, which produces the World of Warcraft series, combine with US group Activision, which makes the Shrek, Spiderman and James Bond games, to form the world’s largest multi-player online and console games publisher.

The new group, which will be known as Activision Blizzard, is expected to have combined revenues of $3.8bn for 2007 and the highest operating margins of any major third-party video game publisher.

World of Warcraft currently has 9.3 million subscribers worldwide making it market leader for online role-playing games.

The groups hope that by joining forces they will immediately become the leading force in the highly profitable online games industry, enabling them to gain a large presence in the rapidly growing Asian markets, such as China and Korea, while remaining strong in the US and Europe.

Jean-Bernard Levy, chief executive of Vivendi, said: “This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector.

“By combining Vivendi’s games business with Activision, we are creating a worldwide leader in a high-growth industry.”

Robert Kotick, chairman and chief executive of Activision, who will become president and chief executive of the new group, said: “By combining leaders in mass market entertainment and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences.”

The deal values Vivendi Games at $8.1bn and the group will also contribute $1.7bn of cash for a 52% stake in Activision Blizzard, while Activism is contributing $1bn.

The merger has been approved by the boards of the two groups, but has still be approved by shareholders in Activision.

The two companies expect the deal to be completed during the first half of next year.