Activision Blizzard's majority shareholder looking for a buyer

So far French conglomerate Vivendi, which holds a a 61 percent stake in the Santa Monica-based videogame company, isn't finding much interest among the most likely suitors, among them Microsoft and Disney. Vivendi has been a mostly hands-off shareholder, so this latest development is somewhat surprising. Two investment banks, Goldman Sachs and Barclays, are assisting Vivendi. From the WSJ:

The Activision review comes amid a wider exploration by Vivendi of the sale or separation of some of its disparate operations so it can narrow its focus to a handful of core businesses, people familiar with the matter have said. Disagreement over those plans led former chief executive, Jean-Bernard Lévy, to leave Vivendi at the end of June, they said. Among the company's businesses are French telecommunications carrier SFR, French pay-television player Canal Plus, Universal Music Group and Brazilian phone operator GVT. By selling "noncore" assets such as the Activision Blizzard stake, or African telecom player Maroc Telecom, which a person familiar with the matter said could also be on the block, Vivendi hopes to boost a share price that recently came close to nine-year lows.

Activision, meanwhile, faces its own challenges - namely, an industry that has increasingly moved from console games to the Internet. The company has been slow to develop an online presence, focusing more on sequels to blockbuster successes, such as "Call of Duty." Activision could repurchase the Vivendi shares, but that might involve borrowing funds or bringing in other investors to help finance the transaction - not an attractive option for a business that has had wide leeway in decision-making. From Bloomberg:

Activision had $3.48 billion in cash and no debt as of the first quarter, according to company filings. The stock trades at 14.6 times trailing earnings, according to data compiled by Bloomberg, below its 25.4 in fiscal 2010 and a five-year high of 67.6 in 2007. The multiple reflects investor uncertainty over growth prospects during a transition phase for the video-game industry with the introduction of the first new consoles in seven years, Edward Woo, an analyst with Ascendiant Capital Markets LLC in Irvine, California, said in a recent interview. Industry growth is now taking place on social-media websites such as Facebook.com and away from traditional consoles.