Activision buys Blizzard (or the other way round)

02 Dec, 2007 5 Comments

In an unexpected announcement over the weekend, Vivendi, the parent company of Blizzard, has bought a controlling stake in Activision. The combined business, to be called Activision Blizzard, will be the largest third-party publisher in the world, with revenues of $3.8 billion compared with EA’s $3.1 billion.

The deal is quite complicated. In the first phase, Vivendi Games will be merged into a subsidiary of Activision with a value of $8.1 billion. Vivendi will also buy shares in Activision valued at $1.7 billion, giving Vivendi 52% stake in the new Activision Blizzard. Then Activision Blizzard will undertake a share buyback, buying back up to $4 billion of its own shares, which will have the double effect of a) returning cash to existing Activision shareholders (presumably in a tax-efficient way) and b) reducing the total number of Activision Blizzard shares in the market. By this method, Vivendi will end up owning 68% of Activision Blizzard, and Activision Blizzard will continue to be listed on NASDAQ with a market value of approximately $19 billion (compared with $17.7 billion for Electronic Arts).

The deal will combine Activision’s strong publishing franchises (like Call of Duty, Guitar Hero and Tony Hawk) with Vivendi’s games business, and particularly with World of Warcraft, which with over 9.3 million subscribers is (according to the press release anyway) the world’s #1 multi-player online role-playing game franchise. It’s a huge deal, creating a real threat to Electronic Arts, particularly as EA does not yet have a category-killing MMO.

So despite comments to the contrary, the ongoing mergers and acquisitions in the games industry are far from over.  What’s next? How about Electronic Arts bidding for NCSoft to get hold of Lineage, Tabula Rasa and Guild Wars?

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5 Responses to “Activision buys Blizzard (or the other way round)”

  1. Grievous 02 Dec, 2007 at 9:42 pm

    har har har

  2. Tom 03 Dec, 2007 at 11:07 am

    EA buying Lineage, Tabula Rasa and Guild Wars? Sounds like the kiss of death for those games.

  3. prophets 10 Dec, 2007 at 5:10 pm

    I think your supposition is wrong.

    1. EA has prior experience with NCSoft’s Garriott brothers when they bought Origin. That was a total disaster.

    2. Tabula Rasa is effectively a POS and will have a shelf life of maybe 6 months, before it is ‘vanguarded’ into the trash heap.

    3. Lineage is a dying product line.

    4. Guild Wars is great, but not worth the price tag of the entire company.

    5. Why buy Guild Wars and Lineage when you just plunked down $250 M for Mythic/Warhammer? Hello?

    It is a bad idea on many levels.

  4. Lottery 11 Apr, 2008 at 11:40 pm

    Will the mergers ever end? Next will be Electronic Arts and Activision…

  5. Recently Showered 20 Oct, 2009 at 11:27 pm

    Electronic Arts and Activision? what are you smoking?

    It will be called “Electronic Arts Activision Blizzard” or “EAAB” for short.