Activision Blizzard Surges (stocks) On Buyout News

[Warpaladin]

http://www.forbes.com/sites/erikkain...n-buyout-news/

This is news from yesterday but I didn't see it on here so I figured you guys would like to see it.

Activision Blizzard has soared nearly 18% in pre-market trading following news that the video game publisher will buyout parent company Vivendi’s controlling stake in the company, in a deal clocking in at $8.2 billion.

( July 26 )

So Activision Blizzard is technically an independent company

[Lochton]

http://www.forbes.com/sites/erikkain...n-buyout-news/

This is news from yesterday but I didn't see it on here so I figured you guys would like to see it.

( July 26 )

So Activision Blizzard is technically an independent company

Aye, before Vivendi could suck money out of them, they did a 180 and smacked them in the face with a buy back contract.

They then spread the stocks to a few investors, but still holding the majority.

[Butler to Baby Sloths]

Aye, before Vivendi could suck money out of them, they did a 180 and smacked them in the face with a buy back contract.

Vivendi desperately needed the cash, and Kotick outplayed them.

[Tomana]

Aye, before Vivendi could suck money out of them, they did a 180 and smacked them in the face with a buy back contract.

More like, Vivendi siphoned money out of them one last time to improve their own statements.
Frankly, I don't quite follow Vivendi's logic in reducing the group's perimeter to media only.

[Gheld]

Vivendi desperately needed the cash, and Kotick outplayed them.

It was a pretty epic maneuver if you ask me. From the creators of epic loots.

[Xisa]

Vivendi desperately needed the cash, and Kotick outplayed them.

I'll give Kotick that. I don't like all of his methods, but the man knows business and how to manipulate it.

Viviendi will still go down after this, and Activision-Blizzard won't be going down with them.

[Lochton]

More like, Vivendi siphoned money out of them one last time to improve their own statements.
Frankly, I don't quite follow Vivendi's logic in reducing the group's perimeter to media only.

No, they didn't get a chance to get the money and still hold major part as their plans was. They wanted to keep taking money. And Activision-Blizzard used Bloodlust and choked them in a contract they weren't prepared for. So, now they can't do it. They still have a little left, but not enough to take their pickings or call them "parent" company.

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Vivendi desperately needed the cash, and Kotick outplayed them.

Aye, that is what I loved. haha.

[Tomana]

Viviendi will still go down after this, and Activision-Blizzard won't be going down with them.

If they spin off SFR as well, they probably won't be going down, at least not in an immediate future.

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No, they didn't get a chance to get the money and still hold major part as their plans was. They wanted to keep taking money. And Activision-Blizzard used Bloodlust and choked them in a contract they weren't prepared for. So, now they can't do it. They still have a little left, but not enough to take their pickings or call them "parent" company.

Mmmh, I don't quite follow you there. The buying back of Vivendi's shares was on the table right from the start of the rumors, as one of the options.
The only change is that the buying was not done by AB itself, but also by a fund with Kotick and Tencent. From Vivendi's PoV, that is pretty much equal.

[Laize]

http://www.forbes.com/sites/erikkain...n-buyout-news/

This is news from yesterday but I didn't see it on here so I figured you guys would like to see it.

( July 26 )

So Activision Blizzard is technically an independent company

I would be very leery of this if anyone were considering purchasing. Vivendi owns over 60% of ATVI. If (and only if) the buyout goes through, the stock will be placed in the treasury. The company can do one of 2 things from there.

- They can retire all 680 million shares (erase them from existence) and allow the remaining shares to wholly represent the company. Expect the share price to more than double if this happens.

- They can re-issue the shares on the open market to recoup some of the costs associated with the buyout. This will cause the share price to tank.

There's way too much uncertainty. ATVI has something like $6 billion in current assets... where are they going to get the other $2 billion? No wait forget that... that would leave them without enough cash to even pay their employees.

More likely they'll be forced to execute an LBO on themselves.

Personally, however, this reeks of foul play. Vivendi has a controlling stake in ATVI with 61% of outstanding shares. If it came to light that they were the ones who set this in motion, I wouldn't be the least surprised. A 60% stake would take years to divest yourself of without tanking the share price.... so forcing the company to buy you out is the most obvious solution. I'd have to look into it to develop a more accurate analysis but an $8.1 billion price tag on Vivendi's stake seems... high. Even considering the premium that is expected from buyouts.

[Lochton]

If they spin off SFR as well, they probably won't be going down, at least not in an immediate future.

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Mmmh, I don't quite follow you there. The buying back of Vivendi's shares was on the table right from the start of the rumors, as one of the options.
The only change is that the buying was not done by AB itself, but by a fund with Kotick and Tencent. From Vivendi's PoV, that is pretty much equal.

No, originally they Vivendi were to keep the majority and then take the divident from Activision-Blizzard. Basicly sucking money from them, and still hold the major share. But Blizzard basicly took it as an oppotunity to strike a deal, as Vivendi needs money already. Activision-Blizzard proposed a deal to buy them out then, leaving them with minimam shares left and some money. But then they aren't allowed to take any divident at all, nor be "parent" company.

[Butler to Baby Sloths]

Mmmh, I don't quite follow you there. The buying back of Vivendi's shares was on the table right from the start of the rumors, as one of the options.
The only change is that the buying was not done by AB itself, but by a fund with Kotick and Tencent. From Vivendi's PoV, that is pretty much equal.

Out of the 49% share bought from Vivendi, 35% was bought by ATVI as a company, and the other 14% by Kotick, Tencent et al as a private business deal.

[Lochton]

I would be very leery of this if anyone were considering purchasing. Vivendi owns over 60% of ATVI. If (and only if) the buyout goes through, the stock will be placed in the treasury. The company can do one of 2 things from there.

- They can retire all 680 million shares (erase them from existence) and allow the remaining shares to wholly represent the company. Expect the share price to more than double if this happens.

- They can re-issue the shares on the open market to recoup some of the costs associated with the buyout. This will cause the share price to tank.

There's way too much uncertainty. ATVI has something like $6 billion in current assets... where are they going to get the other $2 billion? No wait forget that... that would leave them without enough cash to even pay their employees.

More likely they'll be forced to execute an LBO on themselves.

Personally, however, this reeks of foul play. Vivendi has a controlling stake in ATVI with 61% of outstanding shares. If it came to light that they were the ones who set this in motion, I wouldn't be the least surprised. A 60% stake would take years to divest yourself of without tanking the share price.... so forcing the company to buy you out is the most obvious solution. I'd have to look into it to develop a more accurate analysis but an $8.1 billion price tag on Vivendi's stake seems... high. Even considering the premium that is expected from buyouts.

There was talk of some smaller companies to take 5-10-12% deals, but still letting Activision-Blizzard hold the majority.

[Laize]

Aye, before Vivendi could suck money out of them, they did a 180 and smacked them in the face with a buy back contract.

They then spread the stocks to a few investors, but still holding the majority.

Actually this scenario seems more like Vivendi is forcing ATVI to buy them out.

[Lochton]

Good on them, I wonder if this will effect content production in any way?

Currently, shouldn't. Not until next budget meeting, there might be savings needed. Though, we don't know.

[Butler to Baby Sloths]

Good on them, I wonder if this will effect content production in any way?

It won't. The only real change is that Vivendi no longer owns Activision-Blizzard, which is basically just a management layer on top of the two autonomous companies Activision and Blizzard Entertainment.

[Lochton]

Actually this scenario seems more like Vivendi is forcing ATVI to buy them out.

That is plausible, really. But first their plans was to just suck the divident. All in all, it's a better solution.

[Butler to Baby Sloths]

Actually this scenario seems more like Vivendi is forcing ATVI to buy them out.

Vivendi forcing ATVI to buy themselves out at 25% under market price?

[Lochton]

It won't. The only real change is that Vivendi no longer owns Activision-Blizzard, which is basically just a management layer on top of the two autonomous companies Activision and Blizzard Entertainment.

Indeed. It's the shared outcome that will be savings on. The budgets, if they do as they do, should still be untouched.

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Vivendi forcing ATVI to buy themselves out at 25% under market price?

Yeah, that is why I only say "plausible". I still think it's the two boards saying "Vivendi can't take any divident at current time, but they can agree to a new contract". As Vivendi was waiting for approval to take the divident.

It's still an awesome move, changing the whole "drama" by just removing the general problem.

[Tomana]

Out of the 49% share bought from Vivendi, 35% was bought by ATVI as a company, and the other 14% by Kotick, Tencent et al as a private business deal.

Yeah, I missed the "also" in my sentence -_-

[Laize]

There was talk of some smaller companies to take 5-10-12% deals, but still letting Activision-Blizzard hold the majority.

In the treasury? That's silly... and downright irresponsible. A company cannot own itself (ie. shares it holds in treasury are non-voting shares, and dividends are not paid).

That stock needs to either be either released into the open market in a series of public offerings or outright retired.

I think the former is the better option. Retiring the stock saddles ATVI with the entire $8 billion in debt they would need to complete the buyout. That would strangle a company like them. Assuming 5% coupon, that's $400 million a year JUST in interest payments. ATVI's net income is was only $1.1 billion last year and FCF at $1.2 billion.

It would be a serious breach of fiduciary duty to willingly cut profits by 1/3 just to temporarily boost share price. Oh and it WOULD be a temporary boost. Eventually that price will just go down down down down as the company's cash flow is continually weighed on by that debt.

No. They're going to sell the shares back on the open market. I'm not sure how fast or slow they'll do it, but I'm gonna stay far away.