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Vivendi sells small stake in Activision – motivated by EMI deal?

By | Published on Wednesday 16 November 2011


Universal Music owner Vivendi has sold a 3% stake in its gaming company Activision Blizzard, generating $427 million in cash.

The surprise share sale comes just days after Universal announced its acquisition of the EMI record companies, and a week after the record breaking launch of Activision game ‘Call Of Duty: Modern Warfare 3’, which sold a reported 6.5 million copies in the US and UK alone and grossed $400 million in its first 24 hours on sale.

Activision Blizzard was created in 2007 by the merger of Activision and Vivendi Games, and still trades on the Nasdaq stock exchange, although Vivendi is its single biggest shareholder, holding 63%, now 60%, of the stock.

Needless to say, coming so soon after its EMI acquisition announcement, many have speculated that the Activision share sale is in part to boost cash reserves so Universal Music’s billion dollar takeover of the EMI labels does not impact on the French conglom’s credit rating. Others speculated the Paris-based firm was trying to alleviate fears among credit agencies about the impact economic turmoil in the Eurozone could have on the company.

But Vivendi chiefs denied that either of those factors had motivated the Activision share sale last night, insisting the move was “tactical” and designed to benefit the group’s “overall capital structure” rather than provide cash for any particular deal. They also pointing out that Vivendi’s stake in Activision has fluctuated before, and this week’s share sale brings the group’s stake in the gaming business back to where it was at the start of the year.

But an analyst at Bernstein Research told the FT last night it was “quite natural” for commentators to link the Activision share sale to last week’s EMI deal, adding that those who believe there is a link will question the move. Bernstein’s Claudio Aspesi told the paper: “The wisdom of selling about 3% in a business that is one of the key bastions of growth for the group to aid a transformational acquisition in a challenged business, such as recorded music, seems questionable”.

Vivendi admitted last week that it will sell up to 500 million euros of “non-core” Universal assets to help fund the EMI takeover, assuming it is approved by competition regulators.