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Activision Blizzard CEO hears 'Call of Duty,' buys back control

Activision Blizzard CEO used $50 million of his own money in an $8.2 billion deal to take control of the world's biggest video game company from Vivendi, a French company. Activision Blizzard shares surged 15 percent.

By Malathi NayakReuters / July 27, 2013

CEO of Activision Blizzard Bobby Kotick in Sun Valley, Idaho July 9, 2013.

REUTERS/Rick Wilking

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San Francisco

Activision Blizzard Inc's CEO, who is shelling out $50 million of his own money in an $8.2 billion deal to buy back most of Vivendi's stake, said the world's largest video game publisher will be freer to pursue acquisitions and grow after emerging from its French parent's wing.

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Bobby Kotick, one of the highest-paid and longest-running corporate chief executives in an industry ravaged in recent years by the rise of mobile gaming, told investors on a Friday conference call he thinks the company will be stronger as a result of the deal.

Activision shares surged 15 percent to close at $17.46, the highest since September 2008, on the Nasdaq.

Activision will have "the focus and flexibility to drive long-term shareholder value," Kotick said. "The importance of this transaction is that it gives us the opportunity to really reward our public shareholders and you see that in the accretion."

Vivendi agreed on Friday to sell most of its stake in the publisher of the blockbuster "Call of Duty" franchise for $8.2 billion, paving the way for a broader split of the French conglomerate's media and telecoms assets.

The deal, which will reduce the French firm's stake to 12 percent from 61 percent, fulfills Kotick's longstanding wish to buy back the company he had built into a games powerhouse since 1991. Activision merged with Vivendi's games division in 2007.

But the industry is struggling with shrinking demand for videogames as gamers shift away from traditional console titles to mobile games and free-to-play offerings online.

Vivendi is selling the shares in Activision, also known for its "Skylanders" title, for $13.60 each, a 10 percent discount to Thursday's closing price. Analysts said, however, the deal was positive for the company because it removed longstanding uncertainty around how Vivendi would deal with its U.S. unit.

There's no longer "this overhang, that this struggling parent company is going to use Activision and its resources to its own benefit to the detriment of Activision's shareholders," R.W. Baird analyst Colin Sebastian said. "That makes the shares worth more."

BIG MONEY

Activision did not reveal their future plans on Friday.

Kotick and Co-Chairman Brian Kelly are leading an investor group that will separately purchase about 172 million Activision shares, or a 24.9 percent stake, from Vivendi for $2.34 billion. The group includes Fidelity Investments and Chinese web portal Tencent, which will be a passive investor without a seat on the board, gaining Activision big-name backers.

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