Activision Blizzard Announces $8.2b Deal To Buy Back Shares From Vivendi

Activision Blizzard has announced an agreement with Vivendi to buy the majority of the mass media company’s stake in the video game publisher for a total of $8.2 billion.

The agreement, which will make the publisher an independent company, will occur as two simultaneous transactions. Activision Blizzard will repurchase the majority of Vivendi’s stake, approximately 429 million shares, for $5.83 billion in cash ($13.60 per share) using “$1.2 billion of domestic cash on hand and approximately $4.6 billion of debt proceeds.” The second transaction will see the investment group ASAC II LP — which headed up by Activision Blizzard CEO Bobby Kotick and Co-Chairman Brian Kelly — purchase approximately 172 million shares for $2.34 billion in cash ($13.60 per share).

In a statement about the proposed deal, CEO Bobby Kotick said:

“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.”

“Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world, including Call of Duty and World of Warcraft. Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi’s partnership through this period, and we look forward to their continued support.”

Both transactions are expected to be completed before the end of September 2013. Following the conclusion of the deal, Vivendi’s stake in Activision Blizzard will be reduced to 12% (83 million shares) and Kotick’s ASAC II LP investment group will own approximately 24.9%. The majority of the publisher’s outstanding shares will be publicly owned.