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Pachter: An Activision Sale Improbable, A "Spinoff" Likely

The problem is obvious: $8 billion is a sh** ton of money.

Last week, it was reported that Telecom giant Vivendi was looking to sell their share of Activision Blizzard. And because the French conglomerate owns 61% of the world's biggest video game publisher, they might be looking for $8.1 billion.

At the time, Wedbush Morgan analyst Michael Pachter said if Vivendi couldn't locate a buyer, they'd have to try to unload their shares on the open market. He has recently added to those comments in an investor note, in which he says that although a sale is the "preferred route" for Vivendi, there are no "readily apparent buyers."

He says that while some big game-related purchases have been made in the past, no deal has ever come close to reaching the astronomical numbers proposed with Activision. Furthermore, he notes that acquisitions by EA, Time Warner, and Disney typically stay below $1 billion, which is still a far cry from $8 billion. As for the console manufacturers, Pachter says they wouldn't want to "cannibalize" the franchise; one of the reasons CoD is the biggest name in gaming today is because it's available on multiple platforms. Heck, I coulda told you that.

So what's most likely? Well, the analyst says this could result in a "spinoff of Activision Blizzard," which would require some "fancy financing" but would manage to give Vivendi $5 billion in cash. And by the way, if you're looking into stocks, Activision might be a good idea, as their shares would rise by how much cash the company generates every year.

Tags: activision, activision blizzard, activision sale, vivendi

7/3/2012 9:22:49 AM Ben Dutka

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Comments (6 posts)

WorldEndsWithMe
Tuesday, July 03, 2012 @ 11:38:32 AM
Reply

I should really call my guy and see if I have Activision stock.

What? I don't have to love CoD to benefit from it.

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jimmyhandsome
Tuesday, July 03, 2012 @ 12:29:39 PM

You'd be able hedge against your disdain for the franchise

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wackazoa
Tuesday, July 03, 2012 @ 12:22:30 PM
Reply

Microsoft should buy them. Then make COD Xbox exclusive..... Then there'd be a alot better reason to buy Xbox.





Think of their market share then.

Last edited by wackazoa on 7/3/2012 12:23:29 PM

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jimmyhandsome
Tuesday, July 03, 2012 @ 12:37:27 PM
Reply

I've been following it closely and it sounds like it'd be real beneficial to buy Activision stock (I already own some from a couple years ago).

If Vivendi can't find a buyer, one of options would be to increase Activision's debt by $5B, and pay out $8B in dividends (most of Activision's cash balance) to stock holders (Vivendi would get about $5B, or 61% of the total $8B paid out. It comes out to be about $7/share in a huge one time dividend. You make back over 50% of your investment with that, and as Ben said, you'd still own the shares that will rise in value with the more cash Activision generates. And they're pretty good at making money.

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WorldEndsWithMe
Tuesday, July 03, 2012 @ 12:47:43 PM

Solid analysis Jimmy. I usually let Merrill Lynch handle the portfolio as I know crap about business but I know a thing or three about where these game companies are headed.

Last edited by WorldEndsWithMe on 7/3/2012 12:49:31 PM

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BikerSaint
Tuesday, July 03, 2012 @ 9:18:45 PM
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Maybe Vivendi should just spin off Kotex for a $1.80 & then everyone could be happy.

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