@Stitch, the deal seems to value both sides at a premium. There was a lot of risk on ATVI following earnings, particularly lower than expected guidance. I was surprised the stock fell as deeply as it did (down to 19), but there is substantial risk in their 2008 numbers...so the current market valuation in the $22.50 range didn't appear that cheap in the eyes of the market. For full disclosure, I am long ATVI and have been on the basis of Guitar Hero III and Call of Duty 4.
The deal now values ATVI + Vivendi Games at $18.8 billion, with ATVI valued at $8 billion and Vivendi Games at $10.8 billion. The combined company is now valued at more than Electronic Arts (ERTS) which closed at $17.7 billion on Friday. I think the combination definitely has potential, but a valuation higher than ERTS seems a bit bullish--so I would consider the valuation to be a concern.
Next, management is still lead by Bobby Kotick, but Vivendi is taking 6 of the 11 board seats and 52% of the company. I am hoping Vivendi does not interfere with the way Kotick runs the company as Vivendi Games never really accomplished much beyond its acquisition of Blizzard. I think there is a bit of risk here that Vivendi may interfere. When Infogrames (now Atari) acquired all its properties, it ran them into the ground. As long as the management remains US based (the ATVI team), the company should stay strong.
I think historically, mergers have resulted in flat or declining stock growth. I personally am not acquiring at $27.50 and would consider the tender offer.
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The deal now values ATVI + Vivendi Games at $18.8 billion, with ATVI valued at $8 billion and Vivendi Games at $10.8 billion. The combined company is now valued at more than Electronic Arts (ERTS) which closed at $17.7 billion on Friday. I think the combination definitely has potential, but a valuation higher than ERTS seems a bit bullish--so I would consider the valuation to be a concern.
Next, management is still lead by Bobby Kotick, but Vivendi is taking 6 of the 11 board seats and 52% of the company. I am hoping Vivendi does not interfere with the way Kotick runs the company as Vivendi Games never really accomplished much beyond its acquisition of Blizzard. I think there is a bit of risk here that Vivendi may interfere. When Infogrames (now Atari) acquired all its properties, it ran them into the ground. As long as the management remains US based (the ATVI team), the company should stay strong.
I think historically, mergers have resulted in flat or declining stock growth. I personally am not acquiring at $27.50 and would consider the tender offer.