Bobby Kotick, chief executive of Activision Blizzard, is leading an $8.2 billion investor buyout of most of Vivendi's controlling stake in the world's largest video games company.
The group behind Call of Duty and World of Warcraft will use about $1.2 billion in cash and roughly $4.6 billion of debt to buy 429 million shares from Vivendi, the French entertainment and telecoms company which holds a 61 percent stake in Activision.
It will buy the shares for $5.83 billion, or $13.60 per share. An investor group led by Mr Kotick and Activision's co-chairman, Brian Kelly, will buy a further 172 million shares at the same price for about $2.34 billion in cash.
The two deals – priced at a 10 percent discount to Activision's $15.18 closing price on Thursday – will leave Vivendi with 83 million shares, or about a 12 percent stake.
Mr Kotick, Mr Kelly and other investors that include Davis Advisors, Leonard Green & Partners and Tencent, Activision's partner in China, will hold about 24.9 percent. Mr Kotick and Mr Kelly will invest a combined $100 million.
The transactions will allow Vivendi to reap substantial tax benefits. They will also reduce debt at a time when the company is undertaking a sweeping restructuring, under pressure from investors who want its board to simplify the group.
Activision said it would also acquire "certain tax attributes" from Vivendi, such as the ability to use past losses to reduce taxes on future profits. It predicted that the deal would boost pro forma earnings per share this year by 18-29 percent on a GAAP basis and by 23-33 percent on the non-GAAP basis the company uses for its internal planning.
In a statement, Mr Kotick said the deals represented "a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi".
He added that Activision, maker of the Diablo and Skylanders franchises, would become "an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world's most important entertainment companies".
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The transaction was agreed at a board meeting in California on Thursday at which the company was represented by a committee of independent directors.
Activision said it had committed financing from Bank of America Merrill Lynch and JPMorgan, and expected the deal to close by the end of September. It will emerge with about $1.4 billion of net debt.
The agreement came soon after Vivendi gained new powers to force Activision to take on debt and pay out a sizeable dividend.
Standard & Poor's had not taken into account Activision's cash in its triple B rating of Vivendi, so the cash from selling most of its stake could boost the French group's credit rating.