Activision, Inc. and Vivendi have signed a definitive agreement to combine Vivendi Games, Vivendi’s interactive entertainment business– which includes Blizzard Entertainment’s World of Warcraft – with Activision, creating the world’s largest pure-play online and console game publisher. The new company, Activision Blizzard, is expected to have approximately $3.8 billion in pro forma combined calendar 2007 revenues and the highest operating margins of any major third-party video game publisher.

Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top-selling franchises, including Guitar Hero, Call of Duty and the Tony Hawk series, as well as Spider-Man, X-Men, Shrek, James Bond and Transformers.

Under the terms of the agreement, Vivendi Games will be merged with a wholly owned subsidiary of Activision. In the merger, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock. Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games.

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