Activision-Vivendi Games merger talks (WID Dec 4 p6) nearly disin...

and recommended pursuing acquisition of, or a partnership with, Vivendi Games, it said. From November 2006 to the end of March 2007, Activision CEO Robert Kotick and Co-Chairman Brian Kelly had “preliminary discussions” with Vivendi CEO Jean-Bernard Levy, Vivendi Games Chairman Rene Penisson and Vivendi Games CEO Bruce Hack, Activision said. During those talks, Vivendi indicated it was ready to pay a control premium with respect to Activision common stock acquired in the proposed transaction, Activision said. More meetings ensued, leading to a preliminary April 12 proposal by Vivendi under which Vivendi Games would be merged into a subsidiary of Activision in exchange for Activision common stock, Vivendi would buy $1.1 billion more Activision common stock, with Activision paying a special cash dividend to its stockholders totaling about $1.1 billion. Under Vivendi’s proposal, Activision common stock would be valued at a 20 percent premium for purposes of the merger and the share purchase. Once the transactions took effect, Vivendi would hold about 60 percent of Activision’s outstanding shares of common stock on a fully diluted basis. Activision presented a proposal of its own, triggering months of offer and counter-offer, Activision said. June 11, Levy phoned Kotick to tell him that “meaningful differences” between the companies’ proposals and lack of any apparent progress suggested that it made sense to keep talking about a possible transaction. July 8 Kotick phoned Levy with a new offer. Two days later, Levy told Kotick that offer’s terms were generally acceptable to Vivendi, so the meetings revived. But on Aug. 27 management at both companies voiced concern over integrating their corporate structures. Vivendi, for example, wanted to ensure that its Blizzard Entertainment would keep its existing management. Kotick called Hack Sept. 14 to tell him, “given the number of material open issues remaining,” that talks seemed futile, Activision said. But executives on both sides continued to talk and meet, eventually ironing out their differences, said Activision. Activision came to believe that the per share transaction price of $24.75 should rise due to its strong recent and anticipated financial performance and its common shares’ increased trading price. In November, Vivendi indicated readiness to hoist the per share transaction price from $26.25 to $26.75, and increase the amount of cash in the share purchase. Vivendi eventually raised its offer to $27.50, a 45.2 percent premium above Activision shares’ then-current trading price. Vivendi’s management and supervisory boards unanimously approved the deal Nov. 30. A day later, so did Activision’s board. The planned merger was announced Dec. 2.