One Video Game Union Is Celebrated, While Another Struggles to Get to the Altar

[Woodmonkey]

In the video game industry Tuesday, one big merger is nearly done, while another prospective union hasn’t even gotten to the engagement stage.

At its shareholder meeting in Los Angeles, Activision shareholders approved the video game publisher’s proposed deal with Vivendi Games. Under the transaction, Vivendi is anteing up $1.7 billion plus its Blizzard Entertainment Studio in exchange for a 52 percent stake in the newly combined entity. When the deal closes later this week, the company will be called Activision Blizzard.

Activision’s chief executive, Robert A. Kotick, will remain chief executive and president of the new company. Bruce Hack, chief executive of Vivendi Games, will become vice chairman and chief corporate officer of the new entity.

The deal brings together Activision’s portfolio of console games, like Guitar Hero and the Tony Hawk skating franchise, with Blizzard’s hugely popular multiplayer online game World of Warcraft.

The company projects combined sales for calendar 2009 of $3.8 billion.

The new entity will rival Electronic Arts among the biggest independent video game publishers.

Electronic Arts, meantime, appears one step closer to its effort to acquire Take Two Interactive, although the step is a small and effectively administrative one. Electronic Arts said that it has submitted paperwork requested by the Federal Trade Commission, which is assessing possible antitrust implications of a union between E.A. and Take Two.

The F.T.C. has said previously that it would render an antitrust decision within 45 days of E.A. filing the papers. That means that by August 21, E.A. should know whether regulators plan to challenge some aspect of the deal. (One area of concern is that the two companies’ combined influence in the sports video game business could be too dominant.)

But regardless of what the F.T.C. decides (and industry analysts are divided about whether regulators might require some divestitures before permitting a deal), it’s not clear that E.A. and Take Two are ever destined to be together.

EA has proposed paying $2 billion, or $25.74 a share, for Take Two. Take Two’s management has called that figure insufficient, saying it undervalues the long-term potential of the company.

Time is playing an interesting role in the stalemate –- with a ticking clock working both for and against each company.

In the case of Electronic Arts, the company has said it wants to buy Take Two in time to integrate the company before the all-important holiday sales season. On the other hand, Electronic Arts benefits as Take Two’s initial sales surge from its hit Grand Theft Auto IV game subsides.

At the time of the launch and shortly after, Take Two’s shares rose above the $25.74 price offered by EA. But those shares have since come down, closing Tuesday at $24.74.

The Source