Activision Blizzard, Inc. (Nasdaq: ATVI) (the “Company”), a
global leader in interactive entertainment, announced today that it
reached an agreement under which it will acquire from Vivendi
(Euronext Paris: VIV) approximately 429 million Company shares and
certain tax attributes, in exchange for approximately $5.83 billion
in cash, or $13.60 per share acquired before taking into account
the future benefit from these tax attributes. In a simultaneous
transaction, ASAC II LP, an investment vehicle led by Activision
Blizzard CEO Bobby Kotick and Co-Chairman Brian Kelly, to which
they have personally committed $100 million combined, separately
will purchase approximately 172 million Company shares from Vivendi
for approximately $2.34 billion in cash, or $13.60 per share.
Following the completion of the transaction, Activision Blizzard
will be an independent company with the majority of its shares
owned by the public. The Company will be led by Bobby Kotick as
Chief Executive Officer and Brian Kelly as Chairman. Vivendi will
no longer be the majority shareholder, but will retain a stake of
83 million shares or approximately 12%. ASAC II LP—the investor
group which, in addition to Kotick and Kelly, includes Davis
Advisors, Leonard Green & Partners, L.P., Tencent, as well as
one of the largest global institutional investors—will own a stake
of approximately 24.9%.
Activision Blizzard expects that its new outstanding share count
and capital structure (which will include approximately $1.4
billion of net debt) will result in expected pro forma 2013
earnings-per-share (EPS) accretion of between 18% and 29% on a GAAP
basis and between 23% and 33% on a non-GAAP basis.
Bobby Kotick, CEO of Activision Blizzard, said, “These
transactions together represent a tremendous opportunity for
Activision Blizzard and all its shareholders, including Vivendi. We
should emerge even stronger—an independent company with a
best-in-class franchise portfolio and the focus and flexibility to
drive long-term shareholder value and expand our leadership
position as one of the world’s most important entertainment
companies. 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.”
Mr. Kotick continued, “Our successful combination with Blizzard
Entertainment five years ago brought together some of the best
creative and business talent in the industry and some of the most
beloved entertainment franchises in the world, including Call of
Duty® and World of Warcraft®. Since that
time, we have generated over $5.4 billion in operating cash flow
and returned more than $4 billion of that to shareholders via
buybacks and dividends. We are grateful for Vivendi’s partnership
through this period, and we look forward to their continued
support.”
Activision Blizzard will fund the acquisition with the
combination of approximately $1.2 billion of domestic cash on hand
and approximately $4.6 billion of debt proceeds, net of fees and
upfront interest, accessed through the capital markets and bank
financing. The Company has received committed financing for the
transaction from Bank of America Merrill Lynch and J.P. Morgan. The
transaction is expected to close by the end of September 2013,
subject to customary closing conditions.
A special committee of independent directors was formed to
represent the Company in negotiating and evaluating the
transactions.
Please see the Company’s Current Report on Form 8-K being filed
with the Securities and Exchange Commission and the exhibits
thereto for further information about the terms of the
transactions.
Activision Blizzard’s financial advisor on the transaction is
J.P. Morgan Securities LLC and its legal counsel is Skadden, Arps,
Slate, Meagher & Flom LLP. The Special Committee’s financial
advisor is Centerview Partners and its legal counsel is Wachtell,
Lipton, Rosen & Katz. ASAC II LP’s financial advisor is Allen
& Company LLC and its legal counsel is Sullivan & Cromwell
LLP.
Preliminary Second Quarter Results and Full-Year
Outlook
For the second quarter, Activision Blizzard expects to report
GAAP net revenue of approximately $1.05 billion and Non-GAAP net
revenue of approximately $608 million, with GAAP earnings per
diluted share of $0.28 and Non-GAAP earnings per diluted share of
approximately $0.08. In addition, the Company will announce full
second quarter results on August 1, 2013 and hold its regularly
scheduled conference call for analysts and investors at that
time.
For the quarter, Activision Blizzard was the #1 independent
publisher in North America and Europe combined, including accessory
packs and figures, with the #1 and #2 best-selling titles
year-to-date– Skylanders Giants™ and Call of Duty:
Black Ops II.¹ Additionally, Blizzard Entertainment’s
World of Warcraft® remained the world’s #1
subscription-based MMORPG, ending the quarter with approximately
7.7 million subscribers.²
The Company raised its full-year 2013 GAAP net revenue outlook
to $4.31 billion and its earnings per diluted share outlook to
$0.77, up from its prior net revenue outlook of $4.22 billion and
earnings per diluted share outlook of $0.73. Additionally, the
Company affirmed its full-year 2013 Non-GAAP net revenue outlook of
$4.25 billion and earnings per diluted share outlook of $0.82.
These full-year outlook numbers do not yet account for any benefit
of earnings per share accretion from the announced transaction.
Conference Call and Webcast Information
Activision Blizzard will host a conference call and live webcast
on Friday, July 26, 2013 at 8:30 a.m. ET, 2:30 p.m. Paris time,
1:30 p.m. London time to discuss this announcement. The company
welcomes listeners to the call live by dialing (866) 953-6860 in
the U.S. or (617) 399-3484 outside the U.S. using the passcode
14828517. The live webcast of the call can be accessed at
www.activisionblizzard.com.
For those unable to listen to the live conference call, an audio
replay of the call will be available through August 9, 2013 and can
be accessed by calling (888) 286-8010 in the U.S. or (617) 801-6888
outside the U.S. and using the passcode: 30609761. In addition, a
webcast replay also will be archived on the Investor Relations
section of Activision Blizzard’s website.
About Activision Blizzard
Activision Blizzard, Inc. is the world’s largest and most
profitable independent interactive entertainment publishing
company. It develops and publishes some of the most successful and
beloved entertainment franchises in any medium, including Call of
Duty, World of Warcraft, Skylanders, and Diablo®. Headquartered in
Santa Monica California, it maintains operations throughout the
United States, Europe, and Asia. Activision Blizzard develops and
publishes games on all leading interactive platforms and its games
are available in most countries around the world. More information
about Activision Blizzard and its products can be found on the
company's website, www.activisionblizzard.com.
¹According to The NPD Group, GfK Chart-Track and Activision
Blizzard internal estimates, including toys and accessories
²According to Activision Blizzard internal estimates
Subscriber Definition: World of Warcraft subscribers
include individuals who have paid a subscription fee or have an
active prepaid card to play World of Warcraft, as well as those who
have purchased the game and are within their free month of access.
Internet Game Room players who have accessed the game over the last
thirty days are also counted as subscribers. The above definition
excludes all players under free promotional subscriptions, expired
or cancelled subscriptions, and expired prepaid cards. Subscribers
in licensees' territories are defined along the same rules.
Non-GAAP Financial Measures
As a supplement to our financial measures presented in
accordance with Generally Accepted Accounting Principles (“GAAP”),
Activision Blizzard presents certain non-GAAP measures of financial
performance. These non-GAAP financial measures are not intended to
be considered in isolation from, as a substitute for, or as more
important than, the financial information prepared and presented in
accordance with GAAP. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the items associated
with the company’s results of operations as determined in
accordance with GAAP.
Activision Blizzard provides net revenues, net income (loss),
earnings (loss) per share and operating margin data and guidance
and pro forma both including (in accordance with GAAP) and
excluding (non-GAAP) certain items. The non-GAAP financial measures
exclude the following items, as applicable in any given reporting
period:
- the change in deferred net revenue and
related cost of sales with respect to certain of the company’s
online-enabled games;
- expenses related to stock-based
compensation;
- the amortization of intangibles from
purchase price accounting;
- fees and other expenses related to the
transaction; and
- the income tax adjustments associated
with any of the above items.
In the future, Activision Blizzard may also consider whether
other significant non-recurring items should also be excluded in
calculating the non-GAAP financial measures used by the company.
Management believes that the presentation of these non-GAAP
financial measures provides investors with additional useful
information to measure Activision Blizzard’s financial and
operating performance. In particular, the measures facilitate
comparison of operating performance between periods and help
investors to better understand the operating results of Activision
Blizzard by excluding certain items that may not be indicative of
the company’s core business, operating results or future outlook.
Internally, management uses these non-GAAP financial measures in
assessing the company’s operating results, as well as in planning
and forecasting.
Activision Blizzard’s non-GAAP financial measures are not based
on a comprehensive set of accounting rules or principles, and the
terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings
per share, and non-GAAP operating margin do not have a standardized
meaning. Therefore, other companies may use the same or similarly
named measures, but exclude different items, which may not provide
investors a comparable view of Activision Blizzard’s performance in
relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering Activision Blizzard’s GAAP, as well
as non-GAAP, results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
In addition to the reasons stated above, which are generally
applicable to each of the items Activision Blizzard excludes from
its non-GAAP financial measures, there are additional specific
reasons why the company believes it is appropriate to exclude the
change in deferred net revenue and related cost of sales with
respect to certain of the company’s online-enabled games.
Since Activision Blizzard has determined that some of our games’
online functionality represents an essential component of gameplay
and, as a result, a more-than-inconsequential separate deliverable,
we recognize revenue attributed to these game titles over their
estimated service periods, which may range from five months to a
maximum of less than a year. The related cost of sales is deferred
and recognized as the related revenues are recognized. Internally,
management excludes the impact of this change in deferred net
revenue and related cost of sales in its non-GAAP financial
measures when evaluating the company’s operating performance, when
planning, forecasting and analyzing future periods, and when
assessing the performance of its management team.
Management believes this is appropriate because doing so enables
an analysis of performance based on the timing of actual
transactions with our customers, which is consistent with the way
the company is measured by investment analysts and industry data
sources. In addition, excluding the change in deferred net revenue
and the related cost of sales provides a much more timely
indication of trends in our operating results.
Cautionary Note Regarding Forward-looking Statements:
Information in this press release that involves Activision
Blizzard’s expectations, plans, intentions or strategies regarding
the future, including, but not limited to, statements about (1)
projections of revenues, expenses, income or loss, earnings or loss
per share, cash flow or other financial items; (2) statements of
our plans and objectives; (3) statements of future financial or
operating performance; and (4) statements about the completion,
timing, financing and impact of the transactions described herein
are forward-looking statements that are not facts and involve a
number of risks and uncertainties. Activision Blizzard generally
uses words such as “outlook,” “forecast,” “will,” “could,”
“should,” “would,” “to be,” “plans,” “believes,” “may,” “expects,”
“intends,” “anticipates,” “estimate,” “future,” “positioned,”
“potential,” “project,” “remain,” “scheduled,” “set to,” “subject
to,” “upcoming” and similar expressions to identify forward-looking
statements.
Forward looking statements are subject to business and economic
risk, reflect management’s current expectations, estimates and
projections about our business, and are inherently uncertain and
difficult to predict. Factors that could cause Activision
Blizzard’s actual future results to differ materially from those
expressed in the forward-looking statements set forth in this
release include, but are not limited to, sales levels of Activision
Blizzard’s titles, increasing concentration of titles, shifts in
consumer spending trends, the impact of the current macroeconomic
environment, Activision Blizzard’s ability to predict consumer
preferences, including interest in specific genres such as
first-person action and massively multiplayer online games and
preferences among competing hardware platforms, the seasonal and
cyclical nature of the interactive game market, changing business
models including digital delivery of content, competition,
including from used games and other forms of entertainment,
possible declines in software pricing, product returns and price
protection, product delays, adoption rate and availability of new
hardware (including peripherals) and related software, particularly
during the expected console transition, rapid changes in technology
and industry standards, the current regulatory environment,
litigation risks and associated costs, protection of proprietary
rights, maintenance of relationships with key personnel, customers,
licensees, licensors, vendors, and third-party developers,
including the ability to attract, retain and develop key personnel
and developers that can create high quality "hit" titles,
counterparty risks relating to customers, licensees, licensors and
manufacturers, domestic and international economic, financial and
political conditions and policies, foreign exchange rates and tax
rates, and the identification of suitable future acquisition
opportunities and potential challenges associated with geographic
expansion, capital market risks, the possibility that expected
benefits related to the transactions may not materialize as
expected, the transactions not being timely completed, if completed
at all, and the other factors identified in the risk factors
section of Activision Blizzard’s most recent annual report on Form
10-K, as amended. The forward-looking statements in this release
are based upon information available to Activision Blizzard as of
the date of this release, and Activision Blizzard assumes no
obligation to update any such forward-looking statements.
Although these forward-looking statements are believed to be
true when made, they may ultimately prove to be incorrect. These
statements are not guarantees of the future performance of
Activision Blizzard and are subject to risks, uncertainties and
other factors, some of which are beyond its control and may cause
actual results to differ materially from current expectations.
Tables to Follow:
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
Preliminary Results For the Quarter Ended June 30, 2013
GAAP to Non-GAAP Reconciliation (Amounts in millions,
except per share data) Quarter Ended
June 30,
2013
(Preliminary results)
Net Revenues (GAAP) $ 1,050
Excluding the
impact of:
Change in deferred net revenues (a) (442)
Non-GAAP Net
Revenues $ 608
Earnings Per Diluted Share (GAAP)
$ 0.28
Excluding the
impact of:
Net effect from deferral in net revenues and related cost of sales
(b) (0.22) Stock-based compensation (c) 0.01 Amortization of
intangible assets (d) -
Non-GAAP Earnings Per Diluted
Shares $ 0.08 (a) Reflects the net change in
deferred net revenues. (b) Reflects the net change in deferred net
revenues and related cost of sales. (c) Reflects expenses related
to stock-based compensation. (d) Reflects amortization of
intangible assets from purchase price accounting. The per
share adjustments are presented as calculated, and the GAAP and
non-GAAP earnings (loss) per share information is also presented as
calculated. The sum of these measures, as presented, may differ due
to the impact of rounding. Preliminary results are based on
information known to the Company as of July 25, 2013. Actual
results will be announced on August 1, 2013 and may vary.
ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES OUTLOOK
For the Year Ending December 31, 2013 GAAP to Non-GAAP
Reconciliation (Amounts in millions, except per share
data) Outlook for Outlook for Outlook
for Year Ending Year Ending Year Ending
December 31,
2013
December 31,
2013
December 31,
2013
Pre-transaction Post-transaction Post-transaction Pro-forma basis*
Pro-forma basis* Low end of range High end of range
Net
Revenues (GAAP) $ 4,310 $ 4,310 $ 4,310
Excluding the
impact of:
Change in deferred net revenues (a) (60) (60) (60)
Non-GAAP Net Revenues $ 4,250 $ 4,250 $ 4,250
Earnings Per Diluted Share (GAAP) $ 0.77 $ 0.91 $ 0.99
Excluding the
impact of:
Net effect from deferral in net revenues and related cost of sales
(b) (0.03) (0.05) (0.05) Stock-based compensation (c) 0.07 0.11
0.11 Amortization of intangible assets (d) 0.01 0.02 0.02 Fees and
other expenses related to the transaction (e) - 0.02 0.02
Non-GAAP Earnings Per Diluted Shares $ 0.82 $
1.01 $ 1.09 (a) Reflects the net change in deferred
net revenues. (b) Reflects the net change in deferred net revenues
and related cost of sales. (c) Reflects expenses related to
stock-based compensation. (d) Reflects amortization of intangible
assets from purchase price accounting. (e) Reflects fees and other
expenses related to the transaction.
The per share adjustments are presented as
calculated, and the GAAP and non-GAAP earnings (loss) per share
information is also presented as calculated. The sum of these
measures, as presented, may differ due to the impact of
rounding.
* Pro-forma assumes the transactions and their related
financial impacts (including interest expenses from debt, and
associated fees and expenses, and lower share count as of result of
the repurchases) commences January 1, 2013.
Activision Blizzard (NASDAQ:ATVI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Activision Blizzard (NASDAQ:ATVI)
Historical Stock Chart
From Jul 2023 to Jul 2024