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Publisher could partner with investors to repurchase majority stake from parent company.
As news continues to emerge regarding the ongoing saga of Vivendi’s potential sale of Activision Blizzard, it now appears that the buyer could be Activision Blizzard itself. According to The Wall Street Journal, one option that Activision Blizzard and Vivendi have each considered is for Activision Blizzard to buy back all or part of Vivendi’s majority stake.
Since Vivendi acquired Activision Blizzard in 2008, the French company has held a 61% stake in Activision Blizzard, currently worth upwards of $8 billion (the total market value of Activision Blizzard is presently estimated at $13.4 billion). While Microsoft and Time Warner were among buyers approached about a potential sale, Vivendi was last reported to be finding ‘little enthusiasm’ in selling its stake and could instead opt to allow Activision Blizzard to reacquire its own stock.
Activision Blizzard currently has approximately $3 billion worth of cash available with little to no debt, and “would likely have to borrow funds or bring private equity or other outside investors into the fold to help finance a transaction,” according to the Journal. This would likely be a last resort for Vivendi, as the company reportedly believes it could sell the shares at a premium to an outside investor. Vivendi is seeking to sell Activision Blizzard in order to offset its recent placement under negative credit watch by financial services agency Standard & Poor’s, and is also said to be considering selling Activision Blizzard shares on the open market if it can’t find a buyer.
Vivendi’s trouble selling the publisher is reportedly due to the fact that few companies approached have the cash available to find the $8 billion purchase. Analysts also say that Vivendi “faces headwinds from makers of cheaper online and mobile games,” and there are plenty of pros and cons for companies like Microsoft in terms of a potential sale.
Vivendi has made very few public comments about a sale, saying simply "We continue to look at all the options” when approached. If the sale of Activision Blizzard proves to be less than fruitful, Vivendi could simply choose to keep its 61% stake and sell off other assets instead (the company also owns Universal Music Group, French pay TV channel Canal+ and various international telecommunications companies).
Vivendi will report its earnings for the first half of its fiscal year on August 30th, at which point concrete information about the sale of Activision Blizzard or other assets is expected to be revealed. Activision Blizzard, meanwhile, will reveal its second quarter results on August 2nd.
