Brean Capital Analyst Calls Vivendi And Activision Deal A 'Good Thing'

Shares of Activision Blizzard (NASDAQ: ATVI) have edged lower following recent news stating Vivendi S.A. will sell close to 41.5 million shares for a total of $850 million.

Brean Capital said it is optimistic on the deal.

“What you're seeing [in Thursday's stock action] is a temporary supply imbalance,” Brean analyst Todd Mitchell told Benzinga. The stock is trading around $20.60 (down 1.29 percent) in Thursday afternoon's session.

Details Of The Transaction

In a press release on Wednesday, Activision announced a public offering of 41,499,689 shares of its common stock by Vivendi. The offering is in accordance with the agreements announced on July 25, 2013, which states the terms of the transaction for Vivendi's plan to exit the share capital of Activision Blizzard.

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The 8-K filing states, “On July 25, 2013, Activision Blizzard, Inc., a Delaware corporation (the “Company”), ASAC II LP, an exempted limited partnership established under the laws of the Cayman Islands (“ASAC”), and acting by ASAC II LLC, its general partner, and Vivendi S.A., a société anonyme organized under the laws of France and an approximately 61% majority shareholder of the Company (the “Seller”), entered into a stock purchase agreement (the “Stock Purchase Agreement”).”

Vivendi announced on Thursday it has agreed to sell 41.5 million shares of Activision common shares representing 5.8 percent of the company's total shares. The price for the transaction was announced after the closing of the book before Thursday's NASDAQ opening, of which Activision reported proceeds of roughly $850 million.

The offering will tentatively close and settle on May 28, 2014.

A Good Thing

With shares trading down as low as 1.8 percent on Thursday, Mitchell sees no reason for concern. He said that this transaction is a “good thing,” with the pre-packaged deal removing overhang.

He commented that Vivendi got a good price with the deal “done close to the high of the stock.”