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[EpicRandy]

Ryuu96 said:

EpicRandy said:

Actually it's a viable options as there does not really need to be a buyer to divest. I confirmed this with chatGPT so that's it with a grain of salt but it looks reasonable and accurate.

My question "Is there a form of company divestment where the divested part is made public and share of the new entity is distributed among shareholder of the prior whole company?".

Answer : 

Yes, there is a form of company divestment where the divested part is made public and shares of the new entity are distributed among the shareholders of the prior whole company. This type of divestment is called a spin-off, and it involves a parent company creating a new, independent company by separating a division or business unit and distributing its shares to the parent company's shareholders.

In a spin-off, the new company is usually structured as a separate legal entity with its own board of directors and management team, and it operates independently from the parent company. Shareholders of the parent company receive shares of the new company in proportion to their ownership in the parent company, allowing them to participate in the growth and profits of both companies. Spin-offs are often used by companies to unlock value and improve their overall performance by allowing each company to focus on its core strengths and business operations.

I knew the term spin-off but assumed it was just synonym to selling part of a company rather than being it's own separate process (we learn every day). But that said if CMA want divestment in this case it is possible they won't accept spin-off because with the same pool of shareholders it is likely that it act as a strong 2nd party to MS.

Does that mean Activision-Blizzard shareholders? So basically Bobby would remain as CEO?

Interesting but what would that mean for the contracts that Microsoft has negotiated with Nvidia and Nintendo? Will they now be void?

Well...That does sound like a viable option but depending on the answer to my above questions, there could be a few negatives to it still. I'd also wonder if that would even be acceptable for the CMA if they're set on structural remedies. Wouldn't Microsoft still have some sort of notable influence over Activision even if they "operate independently"

No this mean MS make the purchase then spin-off making MS Shareholder also the shareholder of the new Entity and not the prior ABK shareholder as this could not be done prior to the transaction completion as it would completely change what the deals is about.

In regards to all 10 years deal MS should be able to force the new entity to uphold those as the entity is created and "sold" by MS so it may include whatever clause it want in the procedure including upholding all 10 years deal. it could also add day one GamePass as mandatory but the CMA would likely again take issue with this. (ex: My father recently sold the family business to my older brother at an advantageous price but added clause that if he were to sell it he must try to sell to family member first for something like 70% the market value and that this clause remain for the next 40 years).

Wouldn't Microsoft still have some sort of notable influence over Activision even if they "operate independently

Yes as stated prior the CMA may think this avenue would only create a very strong 2nd party to MS and so be insufficient but the thing is the new entity would be publicly traded so the issue should resolve itself before long.