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Activision Blizzard (ATVI) announced a bold financial plan to wrestle it’s independence from merger partner Vivendi. Presuming that closing conditions proceed smoothly, Activision Blizzard will control it’s own destiny beginning in September.
By the numbers, this transformative purchase is huge, and staggeringly so. At a total price-tag of $8.17 billion, Activision along with ASAC II LP, an investor group led by Activision Blizzard CEO Bobby Kotick and Co-Chariman Brian Kelly will purchase a combined 601 million shares at $13.60 from Vivendi.
Considering that their stock was trading at $15 July 25, the deal is quite a steal for Kotick and co. Their stock spiked with the opening of NASDAQ on July 26, at 17.70 before closing at 17.46.
However, the deal is not entirely Kotick’s, nor could one presume that he will be the majority shareholder in the publicly traded company.
Instead, ATVI will be forking the majority of the bill purchasing 429 million shares for an approximated $5.83 billion; an estimated $1.2 billion in cash will be used to fund the transaction with the remainder coming from debt proceeds, upfront interests, capital markets, and bank financing. Already, Activision has announced that Bank of America, Merrill Lynch, and J.P. Morgan are committed towards financing the purchase.
Kotick and Kelly’s ASAC II LP will purchase 172 million shares at an approximated $2.34 billion.
Vivendi will retain 83 millions holding onto a 12 percent stake in the company. Upon closing, ASAC II LP will hold an approximated stake of 25 percent, with the majority of the company owned by the public.
But what of ATVI’s horizon? Should gamers expect any substantial change in what Activision Blizzard has to offer? Most likely not, as of July 25th, the announcement is simply a large step in a 10-year vision Kotick alluded to during an interview with Kotaku back in 2010.
Though I have no crystal ball, gamers can expect a couple developments within the coming years should Vivendi shed itself of a majority stake such as expanding social media integration into Activision and Blizzard Entertainment’s established franchises. Call of Duty ELITE was a rough first outing but it takes more than a single swing to fell a tree. In addition, there should be more expansion in the entertainment value offered by other Activision and Blizzard franchises. Skylanders has been a great success combining formerly separate entertainment ventures of figurines and video games. For those that remember ZBots imagine if they were coupled with a video game such as Skylanders. For those that still play Pokemon games, thankfully Nintendo never came around on this new development in the industry.
Regardless, this move fits with the philosophy Kotick holds towards their developers: Control of their own destiny.
Despite a successful partnership with Vivendi over the last five years, Activision Blizzard will now be leading itself to water.