Gamasutra - The Impact of Activision Blizzard

The surprise announcement of the impending merger of Activision and Vivendi Games that was announced in December 2007 caused shockwaves throughout the industry that are still being felt now, in mid-2008, as the deal rolls towards completion.

In this in-depth investigation, Gamasutra will be summarizing the details of the merger and look at their moves since the announcement, with commentary from some of the industry's most respected authorities in their field, including Wedbush Morgan's Michael Pachter and game attorney Thomas H. Buscaglia.

The Facts of the Deal

Activision and Vivendi announced on Sunday, December 3^rd that they had signed definitive agreement to combine Vivendi Games and Activision into a new company, Activision Blizzard, creating "the world's largest pure-play online and console game publisher" -- a claim based on the expectation for an approximate $3.8 billion in pro-forma combined calendar 2007 revenues, the highest operating margin of a major third-party publisher.

Though this claim has been disputed (including here on Gamasutra) it's generally considered that Activision Blizzard will be at least on a par in size with Electronic Arts.

The transaction is still subject to the approval of Activision's stockholders, but has been approved by the European Commission and, of course, the boards of directors of Vivendi, Vivendi Games and Activision.

Under the terms of the announced agreement Vivendi Games is to be "merged with a wholly owned subsidiary of Activision" -- resulting shares of Vivendi Games being converted into 295.3 million new shares of Activision common stock.

Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games.

Concurrently with this merger, Vivendi will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share for a total of $1.7 billion in cash. As a result of these transactions, Vivendi will own an approximate 52% ownership stake in Activision Blizzard.

Following the completion of the transaction there will be a slight executive shake-up: Robert Kotick will be president and chief executive officer of Activision Blizzard. Bruce Hack, current chief executive officer of Vivendi Games, will serve as vice-chairman and chief corporate officer of Activision Blizzard.

Mike Griffith will serve as president and chief executive officer of Activision Publishing, which is to include the Sierra Entertainment, Sierra Online and Vivendi Games Mobile divisions in addition to the Activision business.

Implying that they intend to "leave well enough alone", Mike Morhaime is to keep his executive position, and continue to serve as president and chief executive officer of Blizzard Entertainment.

Comments

Terry Matthes

11 Jun 2008 at 10:56 am PST

EA will go after Epic Games to seize the Unreal engine technology.

Epic states they wouldn't do such a thing, but in the end it's all about waiting for the right offer.

It will happen

Terry Matthes

11 Jun 2008 at 11:09 am PST

PS. Anyone else see Starcraft II having some kind of multiplayer charge involved?

Leon Leithoff

12 Jun 2008 at 1:20 pm PST

I see no changes from Blizzard's current financial models for their games, not even after the merger. The merger isn't approved yet, and it probably won't be final until about or after Starcraft II ships, especially if the lawsuit mention slows the chance for the shareholder vote. (I'm not a legal guy, though, so when I say I doubt anything will come of it, don't take it as a professional opinion.)

As to the first comment (Epic Games), if anything, I see Microsoft buying up Epic if they ever decide to let go of the business workings of game development

Also, the article mentioned some 'possible financial changes' to World of Warcraft. Maybe. If anything, maybe a livegamer.com style of RMT market for players. I don't see any sort of micro-trans system going into the game. (Why give up the solid income for a very chancy stab at 'potential income' when Blizzard has 10+ million worldwide subscribers?)