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Pachter: Activision Blizzard spinoff 'far more likely' than Vivendi sale


Wedbush analyst Michael Pachter has weighed in on recent speculation suggesting Vivendi would get rid of its stake in Activision Blizzard, following mounting reports that the French conglomerate is trying to sell the game publisher.

Although a sale is "likely the preferred route" for Vivendi, Pachter wrote in a investor note, there aren't any "readily apparent buyers." Running through the list of suitors, it's noted that companies like Tencent Holdings have reportedly payed out $400 million and $600 million to acquire Riot Games and a minority stake in Epic Games, respectively, but those numbers still pale in comparison to Activision's worth at over $10 billion.

Acquisitions by Electronic Arts, Time Warner and Disney usually stay below a billion. Viacom did a $500 million write-off on its Harmonix debacle. It's also unlikely that any of the console manufacturers would purchase Activision Blizzard, since they would have to cannibalize sales. Activision's franchises du jour, like current champ Call of Duty, make so much money because they are available on every major platform.

Pachter believes the more likely outcome is a spinoff of Activision Blizzard. It would require some fancy financing on the back end, but it would give Vivendi an estimated $5 billion in cash, easing its personal burden. After the spinoff, Pachter feels Activision's shares would rise according to how much cash the company generates every year, paying off its debts. Wedbush maintains an "outperform" rating for Activision Blizzard.

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