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About Rainier

PC gamer, WorthPlaying EIC, globe-trotting couch potato, patriot, '80s headbanger, movie watcher, music lover, foodie and man in black -- squirrel!

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Vivendi and Activision Merger Complete, Activision Blizzard is Born

by Rainier on July 10, 2008 @ 1:19 p.m. PDT

Vivendi and Activision announced the completion of the transaction announced on Dec. 2, 2007 to create Activision Blizzard, as the world's most profitable pure-play online and console game publisher.

Activision Blizzard was formed by combining Activision, one of the world's leading independent publishers of interactive entertainment, and Vivendi Games, Vivendi's interactive entertainment business, which includes Blizzard Entertainment's World of Warcraft. Activision Blizzard will continue to operate as a public company traded on Nasdaq under the ticker ATVI.

Jean-Bernard Levy, CEO of Vivendi, said: "We have created the world leader in online and console games with this transaction and the combined strengths of the two businesses offer immense growth potential. I am also very confident that, with the new leadership team in place, the new entity is perfectly positioned to take advantage of these rapidly developing markets across the globe."

Rene Penisson, Chairman of Activision Blizzard, added: "We are delighted that the merger has been completed. We are very excited about the opportunity for Activision Blizzard to create a broader entertainment software platform. We are leaders across North America and Europe and are creating a substantial footprint in the rapidly growing Asian market. We are determined to 'think big'!"

"The completion of this transaction marks the beginning of an important new chapter in the history of interactive entertainment," said Robert Kotick, President and Chief Executive Officer of Activision Blizzard. "By combining leaders in mass-market entertainment and subscription-based online games, Activision Blizzard has leading market positions across all categories of the rapidly growing interactive entertainment software industry. With more than 10.7 million subscribers on World of Warcraft, and with tens of millions of people playing Guitar Hero, Activision Blizzard's games are transcending the traditional stereotypes and are more popular as a form of entertainment than ever before. We look forward to building upon our brands to create value for our shareholders, customers and consumers."

"From the beginning, our goal has been to make the best games in the world, and this transaction strengthens our ability to do just that," said Mike Morhaime, Blizzard Entertainment cofounder and Chief Executive Officer. "As part of Activision Blizzard we'll have the reach and resources to share our games with an even wider audience -- while maintaining the same approach as always to providing high-quality entertainment and services to our players."

In addition to World of Warcraft, the #1 subscription-based massively multiplayer online role-playing game, the transaction brings together some of the world's leading interactive entertainment franchises including Guitar Hero, the #1 family entertainment and #1 music-based franchise; Call of Duty, the #1 first-person action franchise; Tony Hawk, the #1 action sports franchise; Spider-Man, the #1 Super Hero franchise; Cabela's, the #1 sports hunting franchise; and two of the top-ten kids movie-based franchises, Shrek and Madagascar, for calendar year 2005 through 2007 according to the NPD Group, Chart Track and The GFK Group.

The transaction was approved by Activision's stockholders at a special stockholder meeting on July 8, 2008 and closed on July 9, 2008.

Under the terms of the agreement, Vivendi Games merged with a wholly owned subsidiary of Activision and shares of Vivendi Games were converted into approximately 295.3 million new shares of Activision common stock. Concurrently with the merger, Vivendi purchased approximately 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share for a total of approximately $1.7 billion in cash, resulting in a total Vivendi ownership stake in Activision Blizzard of approximately 52% on a fully diluted basis and approximately 54% of shares outstanding.

In accordance with the terms of the agreement, within five business days of the closing of the transaction, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. To the extent that Activision's stockholders participate in the tender offer, the tender offer may be funded with Activision Blizzard's available cash on hand at closing, borrowings made under credit facilities from Vivendi, and proceeds from the issuance of additional shares to Vivendi for up to $700 million. If the tender offer were fully subscribed, Vivendi would own an approximate 68% ownership stake in Activision Blizzard on a fully diluted basis.

The transaction is expected to be immediately accretive in its first year post-closing for Activision's stockholders on a non-GAAP basis excluding equity-based compensation, one time costs related to the transaction, the impact of purchase price accounting related adjustments including amortization of intangibles, and the impact of the change in deferred net revenues and cost of sales related to online-enabled games.

Both Activision and Blizzard Entertainment's businesses have maintained their momentum and Activision Blizzard is well positioned to exceed the financial goals set for the combined company at the time of the deal announcement.

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