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Activision Blizzard Buys Back Stock

Activision Blizzard announces a buyback of its stock from French parent Vivendi for a price tag of $5.83 billion, simultaneously announcing another $2.34 billion in stock is being picked up by a group of investors led by Activision CEO Bobby Kotick and Co-Chairman Brian Kelly, who are committing $100 million of their own pocket change to the kitty. This comes shortly after reports that Vivendi was planning on raiding Activision's cash stockpile to pay down some of its own debt. The company will now be publically owned, with a 12% interest remaining with Vivendi. Here's word:

Following the completion of the transaction, Activision Blizzard will be an independent company with the majority of its shares owned by the public. The Company will be led by Bobby Kotick as Chief Executive Officer and Brian Kelly as Chairman. Vivendi will no longer be the majority shareholder, but will retain a stake of 83 million shares or approximately 12%. ASAC II LP—the investor group which, in addition to Kotick and Kelly, includes Davis Advisors, Leonard Green & Partners, L.P., Tencent, as well as one of the largest global institutional investors—will own a stake of approximately 24.9%.

Activision Blizzard expects that its new outstanding share count and capital structure (which will include approximately $1.4 billion of net debt) will result in expected pro forma 2013 earnings-per-share (EPS) accretion of between 18% and 29% on a GAAP basis and between 23% and 33% on a non-GAAP basis.

Bobby Kotick, CEO of Activision Blizzard, said, “These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi. 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.”

Mr. Kotick continued, “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.”

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40 Replies. 2 pages. Viewing page 2.
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20. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 13:21 Prez
 
Agent.X7 wrote on Jul 26, 2013, 12:28:
ASeven wrote on Jul 26, 2013, 12:22:
Kotick was pretty smart here and killed two birds with one stone. Pretty much this was the only move he could make where ActiBlizz could come out as a winner.

I'm pretty sure this was actually what Vivendi wanted. It's pretty common to announce some batshit insane plan to force stockholders to do what you want them to.

Yep - it's how the game is played.
 
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Goodbye my Monte boy. May you rest in the peace you never knew in life.
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19. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:49 Jivaro
 
Kalthorn wrote on Jul 26, 2013, 12:36:
Not that I can tell what the end of it means, but doesn't paragraph two explicitly state that they are still going to start this new arrangement off with $1.x billion in debt?

They had it anyway, Vivendi or not, as far as I can tell. I am no expert though. Even if they didn't, that is a smaller number than what Vivendi was looking to take.
 
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18. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:36 Kalthorn
 
Not that I can tell what the end of it means, but doesn't paragraph two explicitly state that they are still going to start this new arrangement off with $1.x billion in debt?  
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17. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:36 Jivaro
 
Agent.X7 wrote on Jul 26, 2013, 12:28:
ASeven wrote on Jul 26, 2013, 12:22:
Kotick was pretty smart here and killed two birds with one stone. Pretty much this was the only move he could make where ActiBlizz could come out as a winner.

I'm pretty sure this was actually what Vivendi wanted. It's pretty common to announce some batshit insane plan to force stockholders to do what you want them to.

That is what I assumed as well. Can't see why Vivendi's plans to raid the coffers would have been leaked to the press if this wasn't the plan all along.
 
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16. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:28 Agent.X7
 
ASeven wrote on Jul 26, 2013, 12:22:
Kotick was pretty smart here and killed two birds with one stone. Pretty much this was the only move he could make where ActiBlizz could come out as a winner.

I'm pretty sure this was actually what Vivendi wanted. It's pretty common to announce some batshit insane plan to force stockholders to do what you want them to.
 
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15. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:22 ASeven
 
Kotick was pretty smart here and killed two birds with one stone. Pretty much this was the only move he could make where ActiBlizz could come out as a winner.  
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14. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 12:13 NKD
 
eRe4s3r wrote on Jul 26, 2013, 11:19:
But they get to keep their new billion $ debt.. haha... pwned by Vivendi in all ways possible....

Nope. This happened INSTEAD of the cash-grab. Vivendi gets the cash they need, and Actiblizz gets to keep like $3 billion in cash and are no longer in danger of being raided by Vivendi.
 
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If you don't like where gaming is heading, stop giving your money to the people who are taking it in that direction.
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13. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:59 ViRGE
 
Jivaro wrote on Jul 26, 2013, 11:52:
eRe4s3r wrote on Jul 26, 2013, 11:19:
But they get to keep their new billion $ debt.. haha... pwned by Vivendi in all ways possible....

I am sorry, I don't follow your logic. Can you explain that one to me? Vivendi can't raid them for money, now or in the future. New investors bought the stock. Those investors own that. They aren't in debt to themselves. Yes Vivendi gets the cash infusion of selling that stock, but I am not sure I follow how Acti-Blizz has absorbed any debt. Maybe I am missing something.
I believe you're correct. At first glance it looks like this blocks Vivendi's plan to raid the Activision wallet before it ever happened.
 
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12. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:52 Jivaro
 
eRe4s3r wrote on Jul 26, 2013, 11:19:
But they get to keep their new billion $ debt.. haha... pwned by Vivendi in all ways possible....

I am sorry, I don't follow your logic. Can you explain that one to me? Vivendi can't raid them for money, now or in the future. New investors bought the stock. Those investors own that. They aren't in debt to themselves. Yes Vivendi gets the cash infusion of selling that stock, but I am not sure I follow how Acti-Blizz has absorbed any debt. Maybe I am missing something.
 
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11. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:19 eRe4s3r
 
But they get to keep their new billion $ debt.. haha... pwned by Vivendi in all ways possible....  
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10. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:10 Creston
 
Makes sense. I couldn't imagine Activision/Blizzard sitting around while Vivendi stole all their cash.

Creston
 
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9. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:07 Dagnamit
 
TheDevilYouKnow wrote on Jul 26, 2013, 10:50:
I may be over-simplifying even more ( please forgive me ), but this is kinda like some bizarre fiduciary fencing match. "Game Of Thrones" with money if you will. On the outset it looks like Kotick saved the day "kinda" but it seems he did it by sleeping with more potential enemies. I don't like at all how gaming is being run by huge mega-corps and conglomerates- made up primarily of people who do not game. I am not a tree-hugging hippy (and no disrespect to the tree hugging hippies) but the whole "tiny company makes a great game loaded with F-U-N and makes a great living and are heroes in the community that lived happily ever after" days are GONE. Now the corporate bottom line rules-period.

GONE? I'm pretty sure there are more small devs making great games than ever before. They're not getting Carmack rich and being showered with respect, but you should never put people on that kind of pedestal in the first place.

I think this deal is probably bad for blizz fans. The change of WoW and monitezation of D3 can be traced to the orgins of actiblizz. Blizzard was owned by Vivendi for a long damn time, like the middle 90's. Now the architects of the new actiblizz have consolidated thier control and I don't see that as good for gamers.
 
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8. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 11:07 El Pit
 
LightAssassin wrote on Jul 26, 2013, 09:46:
Be interesting to watch them over time, especially when they expect returns.

Two Call of Duty games PER YEAR!
Call of Duty mobile games!
Call of Duty social network games!
Diablo 3 for iPad and Android!

PROFIT!!!!!! $$$$$$$
 
Consoles? I owned two: a Pong clone and an Atari 2600. And that's it.
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7. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 10:50 TheDevilYouKnow
 
I may be over-simplifying even more ( please forgive me ), but this is kinda like some bizarre fiduciary fencing match. "Game Of Thrones" with money if you will. On the outset it looks like Kotick saved the day "kinda" but it seems he did it by sleeping with more potential enemies. I don't like at all how gaming is being run by huge mega-corps and conglomerates- made up primarily of people who do not game. I am not a tree-hugging hippy (and no disrespect to the tree hugging hippies) but the whole "tiny company makes a great game loaded with F-U-N and makes a great living and are heroes in the community that lived happily ever after" days are GONE. Now the corporate bottom line rules-period.  
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6. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 10:42 siapnar
 
nin wrote on Jul 26, 2013, 09:37:
For a split second, while still half asleep, I thought Bliz had bought it's way out of Activision...THAT would have been (good) news!
Yep, I initiated the same setup for disappointment
 
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I have projectile dysfunction.
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5. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 10:33 Jivaro
 
InBlack wrote on Jul 26, 2013, 10:12:
Well it was pretty clear now that they were simply waiting for Vivendi to sadle its debt on ActiBlizz, which would drive the shareprice waaay down. Not really sure how to feel about this, I guess I shouldnt give a fuck about it, since nothing has changed at all except that now ActiBlizz has even more owners than before...

I know I am over-simplifying but just like Atari selling off franchises is good because someone other than Atari now owns those franchises....this is good because someone other than Vivendi owns the stock.

I am defining good as "preventing things from getting worse" rather than "things actually getting better". I suppose whether or not that is actually good is completely debatable.
 
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4. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 10:12 InBlack
 
Well it was pretty clear now that they were simply waiting for Vivendi to sadle its debt on ActiBlizz, which would drive the shareprice waaay down. Not really sure how to feel about this, I guess I shouldnt give a fuck about it, since nothing has changed at all except that now ActiBlizz has even more owners than before...  
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3. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 09:51 RollinThundr
 
Until they run out of money making the same handful of yearly titles. Can't say I didn't see this coming from Kotick when Vivendi originally took a controlling stake in Activision.

I'm sure to Bobby now completely owning Blizzard is icing on the cake, I bet he wished he'd originally bought them all those years ago when he joked that the CEO of Davidson & Associates was crazy for purchasing Blizzard who were pretty much unknown at that point was crazy for doing so at the time.
 
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2. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 09:46 RenownWolf
 
Tencent Holdings sure is out there getting their hands into the gaming companies. Epic games and Riot already being heavily invested by them.

Be interesting to watch them over time, especially when they expect returns.
 
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1. Re: Activision Blizzard Buys Back Stock Jul 26, 2013, 09:37 nin
 
For a split second, while still half asleep, I thought Bliz had bought it's way out of Activision...THAT would have been (good) news!

 
http://www.nin.com/pub/tension/
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