Yesterday, Vivendi SA and Activision Inc. put the final touches on the largest merger in gaming-industry history to create publishing powerhouse Activision Blizzard. On paper, the merger lumps a number of top development houses under one roof, including World of Warcraft dungeon masters Blizzard Entertainment, Call of Duty generals Infinity Ward, and Guitar Hero shredders Neversoft.
However, as ever-quotable Wedbush Morgan Securities analyst Michael Pachter noted in his analysis of EA's ongoing advances to acquire Take-Two Interactive, many of the top talents in the industry likely have change-of-control clauses in their contracts that would let them jump ship if ownership of the business changes hands. That being the case, it wasn't a certainty that the newly formed Activision Blizzard would retain its stable of highly prized developers.
However, that fear can now be assuaged, given that Variety reports today that "top execs" from all three aforementioned studios have signed long-term contract extensions with Activision Blizzard. No specific individuals were named as part of the report, but Variety confirmed with Activision Blizzard president and CEO Bobby Kotick that "key folks" from both Infinity Ward and Neversoft have extended their contracts for an undisclosed period of time.
As for Blizzard Entertainment, Kotick told Variety, "We realized it would be impossible to compete [with 'World of Warcraft'] and so ultimately my only issue was making sure they were committed for at least five years. They are committed to the franchise in a way we rarely see, since it's something they created from scratch and is their life and livelihood. It didn't take a lot to get them to make that commitment."
In further Activision Blizzard news, the publishing giant said today that its board had approved a two-for-one stock split. The split will go into effect shortly after the $4 billion tender offer to current shareholders to buy back outstanding shares at $27.50 per share. However, given that shares of Activision Blizzard are currently well above the offer initially agreed on when the business combination was announced in December, it is unlikely that the company will find many takers on its offer.
Commenting on the split, Kotick said in a statement, "This action reflects our strong financial position and our confidence in the opportunities for further growth. We believe the stock split will lead to wider ownership by making our stock accessible to a broader base of investors."