Story by Stephany Nunneley
Fri, Jul 26, 2013 | 13:46 BST
Activision Blizzard became an independent company last night, after it bought back the majority of its shares held by former parent company Vivendi which now, only holds a 12% stake. This is, according to Robert W. Baird & Co analyst Colin Sebastian, a “win-win-win” for all parties involved – despite a decrease in WoW subs.
Speaking in an industry email, Sebastian said this was the best outcome for Activision shareholders, as it leaves the company independent and provides significant EPS accretion for investors.
“We believe this is a more favorable outcome for Activision shareholders than the alternative “special dividend” or sale of Vivendi’s shares to an alternative strategic buyer,” he said. ‘As part of the deal announcement, Activision also pre-announced better-than-expected Q2 revenue.
“We also note that World of Warcraft ended Q2 with 7.7 million subscribers, in line with our recent proprietary analysis and estimate of 7.5-8 million.”
World of Warcraft subs stood at 8.3 million back in May when the firm reported its Q1 financials. The 1.3 million decline was attributed to the Chinese market’s decrease in casual engagement.
Activision announced last night it will buy back 429 million of its shares from Vivendi for $5.83 billion ($13.60/share). Activision Blizzard will fund the acquisition with a combination of $1.2 billion of cash and approximately $4.6 billion of debt.
An investment group led by CEO Bobby Kotick and co-chairman Brian Kelly will purchase 172 million shares from Vivendi for $2.34 billion in cash ($13.60/share), and included in the investor group are Chinese Internet company Tencent, Davis Advisors, Leonard Green, and a large global institutional investor
Following the completion of the transaction, Activision will be an independent company with the majority of its shares, or 663%, owned by the public.
A call to investors regarding the sale is going on now, and if anything interesting is announced we’ll let you know.
The firm is expected to announce its Q2 FY13 results next week, August 1. The firm expects revenue of $1.5 billion for the quarter and for the full year expects 4.3 billion in revenue.
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