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SEC Filing Details Sticky Activision/Blizzard Negotiations

A recent SEC filing from Activision has given an extensive look into the background and process of its merger with Vivendi Games, showing a number of breakdowns in negotiations along the way.
A recent SEC filing from Activision has given an extensive look into the background and process of its merger with Vivendi Games, showing a number of breakdowns in negotiations along the way. The filing reveals that action on the merger was first considered as far back as June to September 2006, when Activision management identified the MMO market as one of its top priorities to accelerate the company's growth, and targeted Vivendi Games for a potential partnership. Preliminary discussions took place from November 2006 to March 2007 between the two companies, before deciding to make formal offers in April 2007, which led to the first breakdown in negotiations. Throughout May, both Vivendi and Activision made counter-offers for the structure of the merger and the share price paid for Activision stock, and after a two week break, "[Vivendi CEO Jean-Bernard] Lévy telephoned [Activision CEO Robert] Kotick to advise him that, due to the meaningful differences between the two companies' proposals and lack of any apparent progress, he did not think it made sense to continue discussions concerning a possible transaction at that time." Four days later, an Activision committee came together to rethink its proposal, and made a new offer in early July, which Vivendi said was "generally acceptable". In August, however, more negotiations were necessary to assure Vivendi that "Blizzard Entertainment would continue to be managed by its current management team," which led to a meeting some two weeks later between Kotick and Blizzard CEO Mike Morhaime. The meeting apparently resolved any differences, as negotiations went forward as normal throughout the following several months, before the two made their formal merger announcement in December.

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