Activision Borrows Billions to Buy Itself


Games are one of the most highly grossed products in the world with Call of Duty series being one of those many games purchased and played. One of the world’s largest publisher (of Call of Duty) Activision has bout itself back and is now more independent by buying back $5.83 billion worth of stock from parent company Vivendi. Activision chief executive Bobby Kotick and co-chairman Brian Kelly will purchase additional shares from Vivendi for $2.34 billion.

Vivendi will retain 83 million shares, or 12 percent, of Activision, but the public now owns the majority of Activision’s stock. “These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi,” Activision chief executive Bobby Kotick said in a 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.”

With this purchase, it takes control from Vivendi and gives it back to Activision and it’s board. “Seems like the deal should be a win-win Activision gets its independence, Vivendi gets sorely needed cash, and Activision shareholders get earnings accretion,” R.W. Baird analyst Colin Sebastian told GamesBeat.

“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,” said Kotick.

Activision is also attempting to expand its lineup with new titles such as a massive space war simulation game called “Destiny.” The game is being made along with Bungie Inc., the company that created the popular “Halo” sci-fi war franchise. The company showed off some of the first footage of the game during a recent trade show in Los Angeles to favorable reviews.

Activision said it would fund the purchase with $1.2 billion in cash on hand from its domestic accounts, while the debt financing comes from banks, including J.P. Morgan and Bank of America Merrill Lynch.

This is a lot of money being moved around, but in the end, good things will come to Activision, and games will keep being made, and gamers will be happy that Activision borrowed the money to get its independence. Vivendi needed it because it has $17 billion in debt.

Forrest L. Rawls

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