S&P affirms Vivendi

Standard & Poor's said it affirmed its BBB long-term and A-2 short-term corporate credit ratings on Vivendi SA.

The outlook is stable.

The agency said that the affirmation follows Vivendi's announcement that it intends to combine its video-games business, including its successful Blizzard studio, with Activision Inc.

According to S&P, Vivendi will inject $1.7 billion in equity into the enlarged entity, to be named Activision Blizzard and a $4.0 billion share buyback will be funded using the proceeds of the equity injection, cash on hand, up to $0.7 billion more from Vivendi and up to $0.7 billion in debt.

The agency noted that the transaction will use up some of Vivendi's financial flexibility at the BBB rating level, adding that it estimates that Vivendi's adjusted debt to EBITDA will rise by about 0.5x, to 2.1x at Sept. 30, pro forma for the transaction.

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