Vivendi To Withdraw $2 Billion From ATVI Blizzard

General Discussion

a tldr by ReddinRules

To give a TL;DR for a lot of the news, or gamers who don't understand investments that well:
Activision Blizzard (ATVI) has 1.2 billion shares outstanding. Vivendi owns 732 million of those shares (thus owning 61% of the company).
Dividends are where a company gives you money for each share you own. ATVI's last dividend was $0.19/share, meaning that for each share you owned, you got 19 cents. The last dividend paid out, Vivendi got $139 million (732 million * 19 cents).
As part of the Activision and Blizzard merger, there was a clause saying that Activision would have the final word on dividend payments. 2 reasons for doing this: 1) Give Blizzard protection from having their large cash pool and capital raided, and 2) to empower executives who knew the inner workings of the companies to make decisions. Mergers aren't about finances alone, so-to-speak: the transition can have many other factors that don't show up in financial statements, and thus the board trusts company leadership to make good decisions for a period of time.
That agreement ran out, and thus Vivendi now has the final say on dividend payments. Because of their debt, they're considering ordering a dividend of $2.70/share, or roughly $3.25 billion (of which Vivendi would get roughly $2 billion).
ATVI actually has on paper over $4 billion, but because a lot of that is offshore, it hasn't been taxed yet. This makes the financial situation a lot more complicated.
The end result is likely going to be that Vivendi forces ATVI into debt in order to fulfill their debt obligations. It sucks for everyone.
The biggest "suck" point is just how huge the dividend is. If it were even just $1.75/share, ATVI would be fine - they'd still have a truckload of capital, tons of room to make aggressive investments into new games and studios, etc. But $2.70/share is crippling, and will really limit the sort of "cooler" things they can do. With WoW's decline, it'll be tough for them.
I know people like to say "Activision isn't innovative at all," but with their huge cash pool, they were at least open to cool ideas.
Destiny is a great example of a great investment that's a big risk, and it's a risk that they could only take with their large cash pool. Without it, no more Destiny's - just more CoD repeats.

so maybe bliz ends up having to cut staff and ship dates/quality control as a result.. maybe it will be a case of expect the expansion never. project titan may be dead.
07/22/2013 08:05 PMPosted by Darg
Good....lets swoop in and buy Blizzard for .05 a share and fix this train wreck of a game.

lets see you do it. vivendi will still own 61% of atvi bliz.
Interesting read, +1
Posted by Darg
Good....lets swoop in and buy Blizzard for .05 a share and fix this train wreck of a game.

how about no and let them burn. that's punishment for putting out this pathetic game
Looks like Vivendi broke the Gold Find capping and manage to wear a 600% Gold FInd and milk Blizzard as deep as they can but just fall short of delivering the fatal stab on the golden goose.

Peace out....
This is all well and good, but there is a huge factor that favors Activision/Blizzard. Unlike most companies they are holding zero outstanding debt or credit. Everything they own is owned outright.

This factors immensely into a company's performance and leverage in an open market.
Meh... Everquest was great until Sony bought Verant Interactive....
I'd like to say 'good' but it seems to mean that D3 will never get fixed.

Not that it was on the path anyway, but still, next to zero becomes approximately zero.

So it seems Diablo is on a path to exile.
Drama Queens
This could be a chance. If they need money to compensate the withdrawal, they just need to improve the game and people will happily buy the expansion. If not, sales might be mediocre.
07/22/2013 08:12 PMPosted by Ginko
Sooooo... what you are telling me is that, Titan will have a RMAH + a Subscription fee + Blizzard store where you buy Aesthetics/Levels?

Replace subscription fee with DLC and you've probably described the vast majority of next generation games.

Activision Blizzard is breaking away from French parent company Vivendi Universal, buying itself back in a two-part share acquisition for $8.17 billion, the company announced today.

As part of the deal, Activision will buy back approximately 429 million shares from Vivendi for $5.83 billion. At the same time, a group of investors called ASAC II — headed by Activision Blizzard CEO Bobby Kotick and co-chairman Brian Kelly — will purchase approximately 172 million Activision Blizzard shares from Vivendi for $2.34 billion.

Kotick and Kelly, who contributed $100 million combined to ASAC II, will become CEO and chairman newly independent Activision Blizzard, respectively. Following the expected completion of the transaction in September, Vivendi will hold 12 percent or 83 million shares of the company and ASAC II will be the majority shareholder with 24.9 percent. Other notable ASAC II members include Chinese online entertainment company, Tencent, along with investment firm Davis Advisors and Leonard Green & Partners.

"These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi," Kotick said in a prepared statement. "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."

Earlier this week, Vivendi SA held talks about its plans to extract a $3 billion special dividend from Activision Blizzard. Vivendi sought to sell its stake in Activision Blizzard earlier last year in an attempt to bolster its stock price after a nine-year low. Then in May, it was rumored that Activision management was "interested in buying out" part of Vivendi's current stake.

Activision Blizzard, the world’s biggest video game publisher, has a reached an $8.2 billion deal to separate from Vivendi and become an independent company.

Under a deal that was announced early Friday, Activision Blizzard and a group of investors led by the company’s management will buy back shares owned by Vivendi, the French conglomerate that controls the video game maker, leaving a majority of Activision Blizzard’s shares held by the investing public.

Activision Blizzard will buy about 429 million of its shares shares and certain tax attributes from Vivendi for roughly $5.83 billion in cash, or $13.60 a share, the company said. In addition, Robert A. Kotick, 50, the chief executive, and Brian Kelly, the co-chairman, are leading a group in buying about 172 million shares of the company from Vivendi for about $2.34 billion.

At Activision, a Hero and Villain, Zapped Into One (Dec. 15, 2012)
Vivendi will retain a stake of about 12 percent, or 83 million shares, in Activision Blizzard, the company said. Mr. Kotick will continue to lead the company and Mr. Kelly will become the sole chairman, according to the terms of the deal.

The transactions are a “tremendous opportunity” for Activision Blizzard, the maker of popular game franchises like Call of Duty, World of Warcraft and Diablo, Mr. Kotick said in a statement.

“We should emerge even stronger,” he said. “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.”

The deal represents the latest corporate maneuver for Mr. Kotick, an entrepreneur who, over more than two decades, has built Activision Blizzard into a giant with a market capitalization of nearly $17 billion.

He bought the company that would become Activision in 1990, when it was nearly bankrupt, and proceeded to raise money from investors. In 2008, Mr. Kotick led one of the biggest video game mergers in history when he combined Activision with the games division of Vivendi, a unit that mostly consisted of Blizzard Entertainment.

Activision Blizzard, which is based in Santa Monica, Calif., has had a number of hits recently, notably Call of Duty.

Activision Blizzard, which is based in Santa Monica, Calif., has had a number of recent hits, including the multibillion-dollar franchise Call of Duty. The latest edition of the game, released in November, had sales of $500 million in its first 24 hours.

Speculation emerged over the past year that Vivendi would look to sell its stake in Activision Blizzard. With the deal announced on Friday, Activision Blizzard is betting it can prosper on its own.

The group of investors led by Mr. Kotick and Mr. Kelly — which also includes Davis Advisors, Leonard Green & Partners and Tencent — is expected to have roughly a 24.9 percent stake in the company. Mr. Kotick and Mr. Kelly have personally committed $100 million.

Activision Blizzard plans to finance the deal with about $1.2 billion of cash on hand and roughly $4.6 billion of debt, raised through the markets and bank financing. The company expects to have $1.4 billion of net debt after the deal, which is expected to close by the end of September.

A special committee of independent directors of Activision Blizzard was formed to evaluate the transaction, the company said. It is being advised by Centerview Partners and Wachtell, Lipton, Rosen & Katz.

Activision Blizzard is being advised by JPMorgan Chase and Skadden, Arps, Slate, Meagher & Flom, while the investor group is getting advice from Allen & Company and Sullivan & Cromwell.

The video game maker said on Friday that it expected to report net revenue of about $1.05 billion for the second quarter, using generally accepted accounting principles, with earnings per share of 28 cents. It plans to announce the full results for the second quarter on Aug. 1.
07/22/2013 08:12 PMPosted by Ginko
+ Blizzard store where you buy Aesthetics

I actually think this should have been included in the base game, it's a no-brainer. As long as the store is only offering aesthetic/superficial bonuses and not pay2win advantages like XP buffs and high-end gear.

Activision Blizzard has bought itself back from French media conglomerate Vivendi, meaning it's once again an independent company.

Activision and a group of outside investors announced the $8 billion deal with Vivendi on Friday, and said the move will result in a majority of Activision Blizzard's shares being owned by public investors.

Vivendi will continue to own a 12 per cent stake in the company with 83 million shares. Activision Blizzard has bought 429 million shares, while Activision CEO Bobby Kotick and co-chairman Brian Kelly are at the helm of a separate group purchasing approximately 172 million shares from Vivendi.

According to Kotick, the move should see Activision Blizzard "emerge even stronger".

"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."

Reports that Vivendi was considering selling its stake in Activision Blizzard date back to June 2012, following the former company's share price declining. Vivendi ruled a "straight break-up" out at the time.

Months later, a credible source told CVG that despite Vivendi's claims, the sale of Activision Blizzard "absolutely remains under consideration."

Activision will post its results for the second financial quarter on August 1.

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