Blizzard 2008 Annual Report Download - page 54

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40
Our distribution business consists of operations in Europe that provide warehousing,
logistical, and sales distribution services to third-party publishers of interactive entertainment
software, our own publishing operations, and manufacturers of interactive entertainment hardware.
We maintain operations in the United States, Canada, the United Kingdom (“UK”),
Germany, France, Italy, Spain, Australia, Sweden, South Korea, Norway, and the Netherlands. In
2008, operations outside of North America contributed to 50% of consolidated net revenues.
Business Combination
We consummated our business combination (the “Business Combination”) pursuant to
the Business Combination Agreement (the “Business Combination Agreement”), dated
December 1, 2007, by and among Activision, Inc., Sego Merger Corporation, a wholly-owned
subsidiary of Activision, Inc., Vivendi S.A. (“Vivendi”), VGAC LLC, a wholly-owned subsidiary
of Vivendi (“VGAC”), and Vivendi Games, Inc., a wholly-owned subsidiary of VGAC (“Vivendi
Games”). Upon the closing of the Business Combination, which occurred on July 9, 2008,
Activision, Inc. was renamed Activision Blizzard, Inc. Activision Blizzard continues to operate as
a public company traded on the NASDAQ under the ticker symbol ATVI. Activision Blizzard
now conducts the combined business operations of Activision, Inc. and Vivendi Games including
its subsidiary, Blizzard Entertainment, Inc. (“Blizzard”). In connection with the Business
Combination, we issued 717 million shares of common stock to VGAC including 126 million
shares of common stock purchased by Vivendi for $1.7 billion. Immediately following the
consummation of the Business Combination, VGAC owned 54% of Activision Blizzard’s issued
and outstanding common stock. While Activision, Inc. was the surviving entity in this Business
Combination, because the transaction is treated as a “reverse acquisition,” Vivendi Games is
deemed to be the acquirer for accounting purposes. Accordingly, Activision Blizzard applied
purchase accounting to the assets and liabilities of Activision, Inc. at July 9, 2008. Also, for all
Exchange Act filings following consummation of the Business Combination, the historical
financial statements of Activision Blizzard for periods prior to the consummation of the Business
Combination are those of Vivendi Games. Activision, Inc.’s businesses are included in Activision
Blizzard’s financial statements for all periods subsequent to the consummation of the Business
Combination only.
In accordance with the terms of the Business Combination Agreement, on July 16, 2008,
Activision Blizzard commenced a tender offer to purchase up to 293 million shares of its common
stock at a price of $13.75 per share. The tender offer expired on August 13, 2008. We purchased
171,832 shares of our common stock as a result of the tender offer. These shares were accounted
for using the treasury method and were retired and cancelled.
Vivendi owned approximately 55% of Activision Blizzard’s outstanding common stock
at December 31, 2008.
2. Accounting Changes
Comparative Period—Following the consummation of the Business Combination, the
historical financial statements of Activision Blizzard for periods prior to the consummation of the
Business Combination are those of Vivendi Games. Activision, Inc.’s businesses were included in
Activision Blizzard’s financial statements for all periods subsequent to the consummation of the
Business Combination only.