Activision Blizzard – the merged publishers behind two of the world’s most successful video game franchises – has announced plans to purchase a controlling share of the company from current controlling shareholder, Vivendi.
Announced earlier today, the deal will allow the company to purchase approximately 600 million shares (through financing and outside investors) from the French media conglomerate, meaning a majority of the company will lie in the hands of the public.
Although previous reports had claimed that Vivendi – the company that had acquired Blizzard Entertainment under their Vivendi Games label in 1998, which then merged with Activision a decade later – was looking to sell their controlling stake in the publicly-traded company, it seems that Activision Blizzard has found the funds and financing to do it themselves.
Activision Blizzard will purchase 429 million shares from Vivendi for a total price of $5.83 billion, with a collection of investors organzied by CEO Bobby Kotick and co-chairman Brian Kelly buying an additional 172 million shares for $2.34 billion. The deal would see Kotick retain his current position, and Kelly become the sole chairman of the company – with the two executives each offering $100 million of their own money.
Kotick voiced his optimism for the “tremendous opportunity” the deal presented in a statement to the press:
“We should emerge even stronger. 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.”
Expected to close in September, the purchase would bring Vivendi’s stake in the company down to 12%, with the group of investors led by Kotick alone controlling 24.9%. Activision Blizzard expects to take on $1.4 billion of debt as a result of the deal, which for any other publisher might be cause for concern. Yet with the Call of Duty series showing few signs of surrendering its place as the most profitable video game in history, there’s little to worry about.
For World of Warcraft however, the future is becoming less and less certain. Once enjoying over 10 million subscribers – and still bringing in top dollar for their (ir)regular expansions – the subscription numbers for the biggest MMO in the world have continued to dwindle. One of the most alarming drops took place in the first three months of 2013, with Activision Blizzard reporting a reduction in subscriptions of 1.3 million.
The good news (comparatively) is that in the months since that number has dropped just 300,000, putting current subscribers at approximately 7.7 million, according to Polygon. Skeptics will be quick to claim that the industry is witnessing the beginning of the end for the long-reigning king of MMOs, but it’s hard to ascribe the decline to anything other than competition.
With the largest subscription drops originating in the East – the same region producing the most free-to-play MMOs these days – fluctuation is normal. That being said, the success of the next WoW expansion will certainly be telling. It’s hard to say what the future of WoW holds, but with the upcoming purchase of shares, at least Activision Blizzard will be able to react as they see fit.
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