Activision finally takes control of its company

activision2.jpgThe Santa Monica-based videogame giant has seen huge success over the years, but since 2007 the company was under the thumb of French media giant Vivendi, which held a majority stake. Now that's over - by buying back shares from Vivendi in two separate deals (one involving an investment group led by Activision CEO Bobby Kotick), Activision Blizzard will become an independent, publicly traded company. Transaction is valued at just under $6 billion, with Vivendi maintaining a 12 percent stake. The downside of being independent is taking on debt; under Vivendi, Activision had been largely debt free. Backstory from the Guardian:

The merger of Activision with Vivendi's own games division, which included World of Warcraft creator Blizzard Entertainment, was announced in December 2007. The deal, worth $18.9bn, saw the creation of Activision Blizzard, now the largest third-party video game publisher in the world. Last year, the company announced record revenues of $4.86bn, and first-quarter figures for 2013 showed net revenues of £1.32bn. Recently, however, Vivendi has been struggling to reduce its debt, reported to be in the region of $17bn. The conglomerate is also in talks to sell off its shares in African phone operator Maroc Telecom to Etisalat for $5.5bn. Activision has now released itself from Vivendi's problems, but this could well bring new financial challenges. "It is a substantial and gutsy move by Activision but also an eminently sensible one given the alternatives Activision faced," said Nick Gibson, an analyst with Games Investor Consulting. "Vivendi's majority stake combined with its own balance sheet difficulties could have resulted in raids on Activision's cash reserves - by forcing Activision to pay out large-scale special dividends - or other actions that might have jeopardised Activision's ability to operate.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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