The lights are on
Update: On a special call with investors, Activision disclosed more details about its acquisition of Vivendi's United States holding company. Vivendi, which up until yesterday held 60 percent of Activision Blizzard shares, will now control approximately 12 percent (83 million of 690 outstanding shares). Kotick and Kelly's investor group will hold 24.9 percent of shares, with the pair representing the group on the nominating and governance committee.
In effect, this gives Tencent internal influence among the investor group, but not direct exertion over the direction of Activision Blizzard. However, it was also disclosed that should any member of the investor group decide to sell its shares, there is no right of first refusal. In other words, the shares will be open for bidding without advantage. This allows Tencent (and the others) to exert pressure on Kotick and Kelly privately. Tencent's interest comes from the existing partnership with Activision on Call of Duty Online in China.
As a result of the transaction, Activision is predicting improved performance for this year. We'll know more on August 1 when the company holds its second quarter earnings call.
Earlier in the week, we told you that news was coming that could severely shift Activision's financial profile. Late last night, the company announced that it was separating itself from parent Vivendi, and the price tag is enormous.
$5.83 billion dollars of the buyout will come from Activision, while another $2.34 billion will come from a group of investors led by Activision CEO Bobby Kotick and co-chairman Brian Kelly. The pair have put a combined $100 million of their own funds behind the purchase. Tencent, which owns 40 percent of Epic Games is part of this group.
Activision's part of the purchase comes from $1.2 billion of domestic funds, with another $4.6 billion coming from Bank of America, Merrill Lynch, and J.P. Morgan. Activision has managed to accomplish what Vivendi itself couldn't do in over a year of trying to sell its stake: find someone willing and able to buy.
Our TakeThis is the best possible outcome for Activision, which was about to be bled dry by Vivendi. As I discussed earlier in the week, a special dividend that would have pulled $3 billion from the company would have gotten Activision absolutely nothing except debt.
This purchase gives Bobby Kotick and company freedom, and it's going to make him and his investors very rich. One of those investors, Tencent, is of particular interest. Their 40 percent investment in Epic paired with ownership of some part of Activision could have interesting potential down the line. I wouldn't hold my breath for Gears of Duty, though.
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Couldn't have happen to a better guy...
That's great for Activision. Now they're not weighed down by Vivendi, and Acti themselves didn't pay nearly as much to Vivendi as they were going to. It's a win-win
Tencent + Kotic = get your nickel and dimes ready! Haha!
Maybe Call of Duty will start using the Unreal engine and we'll start seeing great COD games on mobile devices. I dabbled in free to play android games and I'm not a fan of that pay structure for first person shooters so I'm curious as to what direction both Activision and Epic are going to go in with Tencents influence.
This is honestly pretty huge news. I wonder how Activision will work now. If they keep their business models or change things up a bit.
I don't know what it is about that image but he looks evil, the more you crop it around his face the more devilish he look.
Kotic knows how to get things done. Good news for Activision and the devs that rely on them to publish their games.
This is amazing and is swaying me to get more shares in Activision Blizzard. Also, I chuckeled at the Gears of Duty quip.
Nice. I'm not exactly a huge fan of Activision, but I still don't think that the company should suffer because of dead weight that wasn't in their control. I still think they're evil, should burn in hell, but don't deserve bankruptcy :P.
I hope this move pans out for Activision. It seems like exactly what they needed to happen.
For the first time ever, I'm glad with something Kotick did.
I saw this last night as it broke and was thrilled by it. Vivendi was obviously not making decisions that were in the best interest of Activision Blizzard, so it is a very good thing that the majority of their stock was bought out. I still think this will limit creativity to a degree for a couple of years, but I think they will have more freedom once they are able to recoup what they had to expend.