Activision Blizzard goes independent as Kotick leads $8.2 billion buyout
Kotick and Kelly form separate investment group with Tencent as publisher also buys shares
Activision Blizzard is to become an independent company as CEO Bobby Kotick leads an investor buyout from Vivendi worth $8.2 billion.
The publisher of World of Warcraft and Call of Duty will buy 439 million shares from Vivendi for $5.83 billion. In addition, an investment group led by Kotick and co-chairman Brian Kelly, will purchase 172 million shares worth $2.34 billion.
With Vivendi no longer a major stakeholder, Activision Blizzard becomes an independent company led by Kotick and Kelly, whose investment group also includes Chinese operator Tencent, Davis Advisors and Leonard Green & Partners.
"These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi," said Kotick.
"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."
Kotick added, "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."
Kotick's investment group will hold around 24.9 per cent of the company, with Kotick and Kelly investing $100 million combined of their own cash. Vivendi will continue to hold around 12 per cent of shares.
Having known Bobby since 1995, I am amazed at how he built that business and has had incredible success. He is probably the best in the business at running a game company in terms of running it as a business. That said, Activision could never "go indie" since they are a public company with shareholders and business objectives that require stability more than the risky projects indies can both imagine and bring to their markets.
It's heartening to see there is an industry that can support all aspects of game creation, regardless of business model or team size, or even budget..
Btw, the new Acti-Blizz: totally indy.
...no, punk
....no wait: rock.
It is a pity our industry doesn't have more of this sort of skill.
You keep saying consoles are dead, most of the non-Blizzard side of the business is console based.
You call premium priced games archaic, Activision only seem to release paid titles, at least I've not seen them touch FTP.
You call on the death of physical product for games, not only is AB still mostly invested in physical distribution, with Skylanders they invented physical product DLC.
They only announced any serious effort in mobile last year, and we are yet to see results.
So if he is the best businessman in games, is that not flying in the face of everything you say regarding every other company?
Pity indeed. Shame though that the suits dont work more on their image towards us, consumers and press :)
"A man that forgets his history will be constantly cursed to repeat it"
If you do not know the history of Activision then you may need to brush up on this as it will prove pivotal in the coming months after the separation as the company is sitting on a considerable debt which Vivendi has just divested themselves of!
There is a strong danger that Activision could become incredibly vulnerable now they are independent!
I'm really not interested in people's grudges based on whatever past activity rubbed them personally the wrong way. It's small beer.
Activision is making a lot of great products that a lot of people love.
"Acti making products that people love" and "Acti having lots of debt and being vulnerable because of it" aren't mutually exclusive. :) Though a quick skip-through their publically-available financials makes me think they're doing better than, say, EA.
Edited 1 times. Last edit by Morville O'Driscoll on 26th July 2013 11:17am
Why also is it that warned on profitability post 2014?
I am sure that Kotick will move his properties to where the revenue is.
Look at the vacancies at Freestyle and you can see evidence of that move: http://www.freestylegames.com/careers.php
The word is that The Blast Furnace are working on Call of Duty and Skylanders for mobile. They have been up and running for over a year now with a lot of top talent.
@John Donnelly
If more companies were prepared to shed un-needed staff they would be a lot more successful.
The profit advisory is precisely because console is in decline and there is a transition over to mobile. This creates uncertainty for a company currently deriving significant revenue from console.
Edited 1 times. Last edit by Bruce Everiss on 26th July 2013 11:30am
It is a just a matter of timing. Choosing the moment that the critical mass of mobile justifies the investment of converting major properties to it. Kotick moved over a year ago. Likewise there comes the time when platforms need to be abandoned because they are no longer commercially viable. This too is a matter of timing.
Since 2008 console has polarised onto a small number of massive franchises. Activision just happen (due to Kotick's skill) to own a disproportionate number of these. Mid market games are no longer viable and so he doesn't do these. He has adapted the company to the market magnificently.
@Morville O'Driscoll
Which reinforces my point. The new consoles have a very uncertain future, so add to why the profit advisory was needed.
Indeed... I would say it's not how much debt Acti will have after this buy-out that's the problem, but rather how well their franchises succeed on the new consoles. It was definitely the right time for Vivendi to bow-out. All that said, I don't think mobile will help Acti if their console business goes down the pan... It might stave off the inevitable for awhile, but a company the size and weight of Acti can't rely wholesale on mobile; not financially, and not creatively. And it's not like the Blizzard division can easily move WoW, Diablo, StarCraft and Titan to the mobile sector, either.
I am way too old a bunny to have any grudges, stating simple facts that I understand may be a little over your head regarding business discussions. Please don't paint all observations as criticisms or grudges, seems to reflect more on your limitation to look beyond the last press release, or media junket.
For example, over the last year, alongside big titles like Call of Duty and Skylanders, Activision's releases also include -
- The Walking Dead: Survival Instinct
- Transformers Prime: The Game
- Ice Age: Continental Drift
- Wreck It Ralph
- 007 Legends
All of which were mauled by reviewers and were probably developed on a shoestring budget that made critical failure all but inevitable. They've also done a couple of better received mid-range games, Deadpool and Transformers: Fall of Cybertron, which got decent if unspectacular review scores, but don't seem to have sold any better for that. It's hard to see how most of those games could have made a profit, despite the low budgets involved. So why do they keep putting (even small amounts of) money into them?
Are you guys seriously discussing the decline of console games one quartal away from next gen?
Edited 2 times. Last edit by Konstantin Hohl on 26th July 2013 7:32pm
Edited 1 times. Last edit by Andreia Quinta on 26th July 2013 10:33pm
I was discussing what I percieve as an inconsistancies in Bruce's regards to Activision Blizzard with regards to his comments on every other company.
Edited 2 times. Last edit by Andrew Goodchild on 27th July 2013 7:47am
Still 8 Billion He must be doing something right.