Vivendi has agreed to pay $9.8 billion for a 52% stake of Activision Inc., merging its games business with Activision to create the world's largest video game company worth an estimated $18.9 billion, the companies said today.
Vivendi, a French water company, will pay $1.7 billion in cash and contribute its Southern California-based games business, valued at $8.1 billion, in exchange for a controlling stake in Activision. The combined business, to be named Activision Blizzard, would remain a public company and continue to be run by its current chief executive, Bobby Kotii
The merger would put under one roof blockbuster franchises that include "Guitar Hero," "World of Warcraft" and "Call of Duty." The new company would eclipse Electronic Arts Inc., the current world leader, which is worth $17.7 billion. The deal caps a year of rapid consolidation in the fast-growing games industry, as companies race to get bigger, enabling them to absorb skyrocketing development budgets in the failure-ridden, hits business. With powerful new game consoles such as the PlayStation 3 and the Xbox 360 and their capacity to render movielike graphics, development costs have more than doubled, to more than $25 million a game. As a result, Activision, Electronic Arts, THQ Inc., Vivendi and others have sought to diversify their portfolio of games as a cushion against the higher risks. Activision has made nine acquisitions in the last five years, including RedOctane Inc., which created "Guitar Hero."
Activision Blizzard would compete in nearly all game genres, including music simulation, racing, action, sports and the lucrative multiplayer online games. That would make it well positioned to take advantage of a projected double-digit spike in the $40 billion global games market in the next year, according to figures from Wedbush Morgan Securities.
For Activision, the crown jewel of the deal is Vivendi's Blizzard Entertainment, whose "World of Warcraft," "Warcraft," "StarCraft," and "Diablo" games account for four of the top five best-selling computer games of all time. Its latest creation, "World of Warcraft," is a multiplayer online game with more than 9.3 million subscribers who each pay about $15 a month to play
Vivendi, a French water company, will pay $1.7 billion in cash and contribute its Southern California-based games business, valued at $8.1 billion, in exchange for a controlling stake in Activision. The combined business, to be named Activision Blizzard, would remain a public company and continue to be run by its current chief executive, Bobby Kotii
The merger would put under one roof blockbuster franchises that include "Guitar Hero," "World of Warcraft" and "Call of Duty." The new company would eclipse Electronic Arts Inc., the current world leader, which is worth $17.7 billion. The deal caps a year of rapid consolidation in the fast-growing games industry, as companies race to get bigger, enabling them to absorb skyrocketing development budgets in the failure-ridden, hits business. With powerful new game consoles such as the PlayStation 3 and the Xbox 360 and their capacity to render movielike graphics, development costs have more than doubled, to more than $25 million a game. As a result, Activision, Electronic Arts, THQ Inc., Vivendi and others have sought to diversify their portfolio of games as a cushion against the higher risks. Activision has made nine acquisitions in the last five years, including RedOctane Inc., which created "Guitar Hero."
Activision Blizzard would compete in nearly all game genres, including music simulation, racing, action, sports and the lucrative multiplayer online games. That would make it well positioned to take advantage of a projected double-digit spike in the $40 billion global games market in the next year, according to figures from Wedbush Morgan Securities.
For Activision, the crown jewel of the deal is Vivendi's Blizzard Entertainment, whose "World of Warcraft," "Warcraft," "StarCraft," and "Diablo" games account for four of the top five best-selling computer games of all time. Its latest creation, "World of Warcraft," is a multiplayer online game with more than 9.3 million subscribers who each pay about $15 a month to play
