Activision Said to Shelve Plan for Vivendi Stake Purchase

Activision Blizzard Inc., the world’s largest video-game publisher, has halted discussions on buying back shares held by parent company Vivendi SA amid a disagreement on price, people with knowledge of the talks said.

Activision, based in Santa Monica, California, was considering buying at least part of Vivendi’s stake as recently as last month, said the people, who asked not to be identified because the matter is private. Vivendi, which has a 61 percent Activision shareholding valued at more than $10 billion as of yesterday’s close, would have gradually sold its outstanding shares on the open market if a stake remained, the people said.

Activision shares fell almost 2 percent to $14.90 at the close in New York.

Vivendi is still exploring how to extract cash from its stake, including a possible dividend recapitalization, one of the people said. A sale of a small proportion of its shares to the market that would still leave it in control of the video-game group is another option, another person said.

A spokesman for Vivendi declined to comment. Cassandra Bujarski, a spokeswoman for Activision at Sard Verbinnen, didn’t return a call and e-mail seeking comment.

Re-evaluating Structure

Vivendi, Europe’s biggest media and telecommunications company, last year failed to find buyers for its Activision stake, which was the result of dealmaking by ousted Chief Executive Officer Jean-Bernard Levy. The Paris-based telecommunications and media group is re-evaluating its structure amid sluggish share performance and tough competition in the French mobile market.

Philippe Capron, Vivendi’s chief financial officer, said yesterday on a conference call after its earnings report that the board “continues to review a variety of different options” for Activision.

The French daily newspaper Le Figaro reported last month that Activision was considering using part of its $4.5 billion cash pile to buy some of Vivendi’s stake.

While Activision has been a lucrative asset for Vivendi, competition from so-called social games like those offered by Zynga Inc. as well as the increasingly hit-driven nature of the industry have drawn investor concern.

Its flagship “World of Warcraft” online game lost 1.3 million subscribers in the most recent quarter, and the company faces the challenge of refreshing that franchise and its military-themed game “Call of Duty.” Activision earlier this month issued a cautious sales outlook for the rest of the year, sending its shares down the most in 18 months.

Chief Executive Officer Bobby Kotick, who has led Activision for more than 20 years, has meanwhile seen his largest shareholder transformed from a stable, hands-off investor to a candidate for breakup. Vivendi has sought to sell its Maroc Telecom unit and GVT, a Brazilian broadband provider. The company is also weighing a spinoff of its largest unit, French mobile operator SFR, people familiar with the situation said in March.

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