Activision Blizzard has nearly bought out Vivendi, the company it merged with five years ago, and is now an independent video game publisher.
In a transaction announced early Friday, just after midnight ET, Activision Blizzard announced that it will buy back for $5.83 billion about 429 million shares from Vivendi.
In another transaction, ASAC II LP, a new investment vehicle led by Activision Blizzard CEO Bobby Kotick and co-chairman Brian Kelly, will buy about 172 million shares from Vivendi for about $2.34 billion in cash.
Following the close of these two transactions, expected to be by the end of Sept., Vivendi will retain about 12% of Activision Blizzard, and will no longer be the majority shareholder. Kotick and Kelly contributed about $100 million combined to the new investor group, which also includes Davis Advisors, Leonard Green & Partners, L.P., and Chinese online gaming giant Tencent. The group will own about 24.9% of the stock. The investing public owns the majority of company shares.
"These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi," 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. 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 company, which reports its second quarter earnings next week, raised its full-year revenue outlook to $4.31 billion, up from its previous 2013 outlook of $4.22 billion, and raised its earnings per share forecast to $0.77, up from $0.73.
Activision and Vivendi announced their merger back in 2008 and the company became Activision Blizzard. "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," Kotick said. "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."
- by Mike Snider, USA Today )Twitter: @MikeSnider).