Deals: A Good Start on Holiday Shopping

Vivendi-Activision video-game combination leads a surge of strategic buying, followed by Philips Electronics $2.75 billion bid to become the biggest lighting company in North America.

Correction: An earlier version of this story incorrectly identified Stifel, Nicolaus & Company as the financial advisor to Citadel Investment Group in its acquisition of ETrade. It has been corrected to read “none.” regrets the error.

Consumers might not be streaming into retail stores, but corporate buyers are off and running in the pre-winter-holiday period.

The monster, $8.1 billion tie-up of French communications group Vivendi SA and U.S. videogame maker Activision led the top ten North American deals last week, a flurry of merger activity that was worth $21.47 billion, up almost fourfold from the prior seven-day period.

Vivendi’s complex deal with Activision comes in the last month of a record sales year for video game developers and a particular sparkling one for Activision, which publishes three of the eight best-selling video games in the U.S. In the transaction, Activision will buy Vivendi’s game unit and Vivendi will in turn acquire a controlling stake in the new company, Activision Blizzard. Activision Blizzard will have combined pro-forma revenue of $3.8 billion, besting next-year’s revenue forecast for the largest independent videogame publisher, Electronic Arts.

Not counting the Vivendi-Activision transactions, there were three other $1 billion-plus deals, — according to data provided to by mergermarket — including Royal Philips Electronics’ $2.75 billion takeover of rival Genlyte Group, a transaction that Philips almost pulled out of in October. In an the largest all-U.S. deal, Cigna Corp. acquired Great-West Healthcare’s health and group insurance businesses for $1.5 billion.

The 48 announced deals last week, up from 24 in the prior seven-day period, increased year-to-date transaction values to $1.48 trillion, up from the $1.36 trillion in deals signed through Dec. 2, 2006. In total, 4,515 deals have been announced in 2007, 300 more than in the same period last year.

Will the holiday buying spirit become infectious and push 2007 levels even higher? We’ll have to wait and see.

Activision Inc to buy Vivendi Games Inc from Vivendi SA for $8.12 billion

Activision, the Santa Monica, California-based video-game publisher will acquire Los Angeles-based video-game publisher Vivendi Games, from Vivendi SA, the Paris-based provider of media and telecommunication services. Shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock at $27.50 per share. Within five business days after the deal closes, which is expected sometime in the first half of 2008, the company will be renamed Activision Blizzard and will launch an all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. The tender offer will be funded by Activision Blizzard’s cash on hand at closing, including the cash received from the Vivendi share purchase. Vivendi has agreed to acquire additional new issued shares from Activision Blizzard for up to an additional $700 million, the proceeds of which would also be used to fund the tender offer.

Seller financial advisor: Goldman Sachs
Bidder financial advisor: Allen & Company
Seller legal advisor: Gibson Dunn & Crutcher
Bidder legal advisor: Skadden Arps Slate Meagher & Flom; and Wachtell Lipton Rosen & Katz


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