Thank you for sharing!

Your article was successfully shared with the contacts you provided.
$19B VIDEO GAME MERGER PLAYED ON RARE STRUCTURE Santa Monica-based Activision’s nearly $19 billion merger with France’s Vivendi is one of the largest deals to date involving an L.A.-based company, said Brian McCarthy, a lawyer from SKADDEN, ARPS, SLATE, MEAGHER & FLOM who represented Activision. And that’s not the only notable aspect of the gaming deal. Its deal structure was rare; McCarthy said he’s seen less than a handful of similar structures before in corporate deals. On top of all of that, lawyers involved said the content was a lot of fun � the companies make popular games such as “World of Warcraft,” the online role-playing game, and “Guitar Hero,” a video game which simulates playing rock and roll music. “We watched some of the management play ‘Guitar Hero’ during one of the sessions,” McCarthy said. “There was a good vibe among everyone involved from the beginning.” The structure itself, while not unprecedented, was unusual. That’s because it essentially will let the Activision shareholders decide whether they would like to keep their shares or cash out. As part of the deal, a subsidiary of Activision will acquire Vivendi Games, Vivendi’s gaming arm. In return for that contribution of Vivendi Games and $1.7 billion in cash, Vivendi will receive a 52 percent ownership stake in Activision. Upon closing, which will likely be in the first half of 2008, Activision will be renamed Activision Blizzard and will continue to operate as a public company traded on Nasdaq. After that closing, current Activision shareholders will be able to decide whether they want to sell up to half of their common shares at a 31 percent premium to the market price at the time the deal was signed. They could also opt not to do anything, keep all their shares, and stay in the newly-renamed Activision Blizzard. That structure helped Vivendi reach its goal of keeping the newly merged entity a public company. That is advantageous, in part, because it makes the game business more visible and easier to value, said Ruth Fisher, a partner at GIBSON, DUNN & CRUTCHER who represented Vivendi and Vivendi Games in the transaction. And, it was good for Activision shareholders, Fisher said. While in many mergers, shareholders of the acquired company get cashed out, here they were offered the opportunity to keep shares in a much larger company � an attractive prospect, she said. But it did involve a lot of legal complications. Having a company that remains public with one large shareholder makes governance issues a serious factor. “You want to make sure that all of the interests are properly recognized and aligned,” she said. An example of a provision they made to ensure that was splitting the Activision Blizzard board of directors among Vivendi designees, Activision management and independent directors currently on Activision’s board. “It’s a relatively unique structure � we haven’t seen many of these before,” Fisher said. “It was an intellectually challenging transaction,” McCarthy added. “The beauty of being an M&A lawyer is that every deal is different, and there’s always something fresh. This deal had more than its share of different.” But more so than all of the legal wrangling, the deal was memorable for Fisher on a personal level. She has teenage sons, both of whom are gamers who play “Guitar Hero” and “World of Warcraft.” “It’s the first deal in my life that my kids were interested in and thought I was cool,” she said. Gibson’s California team included Fisher, the co-chairwoman of the firm’s media and entertainment practice; Century City partner Mark Lahive and Los Angeles associates Mary Ruth Hughes, Kristin Blazewicz and Ciara Stephens for corporate. Los Angeles partner Hatef Behnia and associate Afshin Beyzaee worked on tax; Los Angeles associate Sean Feller on employment and employee benefits; and San Francisco partner Joel Sanders and associate Rebecca Justice Lazarus on antitrust. On the Skadden side, Los Angeles partners included McCarthy, David Eisman, Moshe Kushman, Karen Corman, Michael Lawson and Harriet Posner. Los Angeles associates included Troy Vigil, Nicole Ostrowski, Amy Goetz, Nicolai Schwarz-Gondek, Eileen Uy, Michael O’Brien, Shahrooz Shahnavaz, Kim Brener, and David McFarlane. Palo Alto partner David Hansen also worked on the matter for Skadden.

Kellie Schmitt

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.