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Activision goes independent in $8.2 billion buyout

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Call of Duty: Ghosts (Credit: Activision)

Bobby Kotick, the sometimes controversial CEO of Activision-Blizzard, is leading an $8.2 billion buyout from parent company Vivendi, a move that will restore independence to the world's largest video game publisher.

The agreement will occur in a pair of purchases. Activision, as a company, will acquire 429 million shares for $5.83 billion in cash, while an investor group headed by Kotick and co-chairman Brian Kelly will separately purchase another 172 million shares for $2.34 billion. Kotick and Kelly have personally invested a combined $100 million into the company.

"We won't be running the business any differently ... but I think it should give us a lot more flexibility," Kotick told CNBC this morning. "I think it will give us a lot more flexibility in thinking about acquisitions for the future."

Vivendi, which will retain a 12 percent ownership stake in Activision-Blizzard, has been looking to unload its Activision shares for some time now as its other business divisions have been struggling. Talks had been heating up that Vivendi had been considering forcing Activision to pay a "special dividend" to shareholders, which would have given Vivendi some much needed cash, but would have taken a big toll on the game maker's cash reserves.

The two companies came together in 2008, when Activision merged with Blizzard Entertainment to create the gaming giant it is today. Among the company's properties are enormously popular franchises like Call of Duty, Skylanders, and World of Warcraft.

"Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world," said Kotick. "Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi's partnership through this period, and we look forward to their continued support."

One of Kotick's partners in the $2.34 billion purchase is Chinese gaming giant Tencent, which has been a partner of the company for many years. Tencent provides an avenue for Chinese gamers to play World of Warcraft and has been working with Activision to develop a massively multiplayer online version of the Call of Duty franchise.

Tencent also owns a stake in Epic Games and Riot Games, maker of the popular online game League of Legends.

Investors cheered the news of the Activision buyout. Shares of the company were up over 15 percent Friday morning.

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