Activision Blizzard Nears All-Time High on Independence from Vivendi

Companies and Brands

Published: July 26, 2013 9:00 am

Last Updated: April 27, 2020 3:12 pm

The two transactions that will wrestle control of Activision Blizzard Inc. (NASDAQ: ATVI) from France’s Vivendi will transform Activision Blizzard into an independent company once more. The company will pay $13.60 a share for 429 million shares ($5.83 billion), and the company’s CEO and chairman will pay the same per share price for another $172 million shares ($2.34 billion) through an investment vehicle called ASAC II.

Activision Blizzard expects the transaction to yield a pro-forma 2013 earnings per share (EPS) increase of 18% to 29% on a GAAP basis and 23% to 33% on a non-GAAP basis.

In the five years since the merger between Activision and Blizzard, shares have never traded above the break-even line. Currently, Activision Blizzard shares are about 15% below their price five years ago. The news of the buyout is sending shares higher, but the $13.60 price is more than $1.50 below last night’s closing price.

According to the company’s announcement, the full-year non-GAAP revenue estimate has been boosted to $4.25 billion and EPS will rise to $0.82. The estimates do not take into account today’s announced transaction. The current consensus estimates called for revenues of $$4.29 billion and EPS of $0.85.

Are we missing something here? Activision Blizzard’s latest outlook is lower than the consensus estimate. Adding more shares will improve the company’s take certainly, but there is no fundamental change in the company’s business except who gets to call the shots. And the two guys who have been calling most of the shots, the CEO and the chairman, have been in charge while the shares languished since the 2008 merger. That’s encouraging, right?

Activision Blizzard’s shares are up 17.5% in premarket trading this morning, at $17.83 in a 52-week range of $10.45 to $16.11.

Want to Retire Early? Start Here ^(Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.