Activision 2015 Annual Report Download - page 21

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3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Business Overview
Activision Blizzard, Inc. is a leading global developer and publisher of interactive entertainment.
The Business Combination and Share Repurchase
Activision, Inc. was originally incorporated in California in 1979 and was reincorporated in Delaware in December 1992.
Activision Blizzard is the result of the 2008 business combination (“Business Combination”) by and among the Company (then known
as Activision, Inc.), Sego Merger Corporation, a wholly-owned subsidiary of Activision, Inc., Vivendi S.A. (“Vivendi”), VGAC LLC,
a wholly-owned subsidiary of Vivendi, and Vivendi Games, Inc. (“Vivendi Games”), a wholly-owned subsidiary of VGAC LLC. As a
result of the consummation of the Business Combination, Activision, Inc. was renamed Activision Blizzard, Inc. and Vivendi became
a majority shareholder of Activision Blizzard. Activision Blizzard is a public company traded on the NASDAQ under the ticker
symbol “ATVI.”
On October 11, 2013, we repurchased approximately 429 million shares of our common stock, pursuant to a stock purchase agreement
(the “Stock Purchase Agreement”) we entered into with Vivendi and ASAC II LP (“ASAC”), an exempted limited partnership
established under the laws of the Cayman Islands, acting by its general partner, ASAC II LLC. Pursuant to the terms of the Stock
Purchase Agreement, we acquired all of the capital stock of Amber Holding Subsidiary Co., a Delaware corporation and
wholly-owned subsidiary of Vivendi (“New VH”), which was the direct owner of approximately 429 million shares of our common
stock, for a cash payment of $5.83 billion, or $13.60 per share, before taking into account the benefit to the Company of certain tax
attributes of New VH assumed in the transaction (collectively, the “Purchase Transaction”). Refer to Note 11 of the Notes to the
Consolidated Financial Statements for information regarding the financing of the Purchase Transaction.
Immediately following the completion of the Purchase Transaction, ASAC purchased from Vivendi 172 million shares of our common
stock, pursuant to the Stock Purchase Agreement, for a cash payment of $2.34 billion, or $13.60 per share (the “Private Sale”). Robert
A. Kotick, our Chief Executive Officer, and Brian G. Kelly, Chairman of our Board of Directors, are affiliates of ASAC II LLC.
On May 28, 2014, Vivendi sold approximately 41 million shares, or approximately 50% of its then-current holdings, of our common
stock in a registered public offering. Vivendi received proceeds of approximately $850 million from that sale; we did not receive any
proceeds.
As of December 31, 2015, we had approximately 734 million shares of common stock issued and outstanding. At that date, (i) Vivendi
held 41 million shares, or approximately 6% of the outstanding shares of our common stock, (ii) ASAC held 172 million shares, or
approximately 23% of the outstanding shares of our common stock, and (iii) our other stockholders held approximately 71% of the
outstanding shares of our common stock.
On January 13, 2016, Vivendi sold all of their remaining shares of our common stock. We did not receive any proceeds.
The King Acquisition
On November 2, 2015, we and King Digital Entertainment plc, a leading interactive entertainment company for the mobile world
incorporated under the laws of Ireland (“King”), entered into a Transaction Agreement (the “Transaction Agreement”) under the terms
of which we would acquire King (the “King Acquisition”) and King would become a wholly-owned subsidiary of the Company. On
February 23, 2016 we completed the King Acquisition under the terms of the Transaction Agreement. We transferred $5.9 billion in
consideration to the existing King shareholders and share-based award holders.
The Company made this acquisition because it believes that the addition of King’s highly-complementary mobile business will
position the Company as a global leader in interactive entertainment across mobile, console, and PC platforms, and positions the
company for future growth. The combined company has a world-class interactive entertainment portfolio of top-performing
franchises.
As the closing of the King Acquisition occurred subsequent to December 31, 2015, our financial results as of, and for the year ended
December 31, 2015, do not contain the results of King.
10-K Activision_Master_032416_PrinterMarksAdded.pdf 3 3/24/16 11:00 PM