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Guitar hero and World of warcraft

Guitar hero and World of warcraft makers merge

TWO of the world's biggest videogame companies will merge in an $11 billion deal that will combine the Guitar Hero and World Of Warcraft franchises under one roof.

The owner of Blizzard Entertainment, French media and telecom group Vivendi, announced the $US9.85 billion ($11.13 billion) deal with Activision Inc on Sunday.

The two game companies will merge into an industry heavyweight with annual revenue of more than $4 billion, rivalling the world's biggest independent games publisher Electronic Arts (EA).

Blizzard Entertainment has been responsible for the successful Warcraft, Starcraft and Diablo franchises, while Activision is riding high on the success of the Guitar Hero, Call Of Duty and Tony Hawk series.

The complex deal will give Vivendi a 52-per-cent stake in the new company, to be called Activision Blizzard.

"This turns Activision into an EA-like company," said Michael Pachter, an analyst with Wedbush Morgan Securities.

"It turns them far more global, puts them in China, where they haven't been, and in (online games), where they haven't been."

Vivendi will contribute its Vivendi Games business, which it valued at $9.18 billion, and provide $1.95 billion in cash for the 52-per-cent stake in Activision Blizzard. These terms value the combined company at more than $21 billion.

Activision Blizzard will operate as a publicly traded company. The news surprised some commentators after Activision's recent surging sales and profit.

"This company didn't look like it was positioning itself for a sale," said Mike Hickey, an analyst with Janco Partners

"They've had a phenomenal year and everyone likes to go out on top, so maybe that's what they're doing." Activision and EA have broadened their offerings by purchasing privately-held game developers. In October, Activision bought Britain's Bizzare Creations, a maker of racing games, while EA bought BioWare/Pandemic, a creator of role-playing and action games.

"Blizzard was an appealing partner because of their culture, their willingness to provide capital," said Activision chief executive Bobby Kotick.

"There was personal chemistry and a shared philosophy – Vivendi is focused on shareholder returns."

Mr Kotick will stay on as CEO of Activision Blizzard, with Vivendi Games chairman Rene Penisson becoming chairman. Activision co-chairman Brian Kelly will also be co-chairman of the new company.

The deal will immediately boost Activision's earnings in the first year after closing, and will be "slightly accretive" for Vivendi's stockholders, the companies said.

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