Activision will once again be independent, as the gaming giant Activision Blizzard has now purchased the majority stake in the company away from Vivendi media. You may recall that in 2007, the two gaming giant’s merged and formed Activision Blizzard. The majority of Activision-Blizzard’s stock was held by Blizzard’s parent company, Vivendi, who had previous published games themselves as well under labels like Sierra. Today’s purchase of 601 million shares costed nearly 8 billion dollars, with 5.83 billion coming from Activision itself, and the reaming from Bobby Kotick, Activision’s CEO, Chairman Brian Kelly and others purchased the remaining 2.34 billion.
Some of Activion Blizzard’s stock was purchased by Tencent, the Chinese gaming giant who owns Riot Games, the creators of League of Legends, as well as Activision’s partner for the release of Call of Duty Online in China. Kotick has gone on record saying that there portion of the purchase was primarily a sign of the Tencent’s “enthusiasm” at the buyback. Tencent has made major moves recently in the US gaming sector, with a recent $330 million dollar purchase of 48% of Epic Games.
The newly independent company will still retain Bobby Kotick as it’s CEO and Brian Kelly as it’s Chairman. Kotick had the following to say on the merger “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.”
The buy back was completed with 1.2 billion in cash and 4.6 billion in new debt, which was financed by lending giants Goldman Sachs, JP Morgan, and Bank of America. This new debt may seem incredibly large, but the company still has 3 billion in cash on hand, and that amount has steadily increased each year. The launch of the newest Call of Duty and Skylanders will certainly take care of these debts rather easily. Note: Skylanders Giants and Call of Duty Black Ops II were the top two selling games in the US and Europe this year. Activision Blizzard stock is currently up over $2 on the news, closing at $17.46.
This reporter’s opinion: This is a good move for Activision Blizzard. Vivendi has been attempting to extract cash from Activision Blizzard, after it’s failed attempts to sell it, and this buyback allows Activision Blizzard to finally chart there own course completely. The company has incredibly strong titles, and a new Call of Duty will help pay down that debt very quickly. As much as people talk poorly about Call of Duty and Skylanders, this is also the company who has put out games like Prototype and Spec Ops: The Line. These titles became a reality because of the revenue generated by those two juggernauts.
by, Bobby Marquardt