Activision and Vivendi Games are to merge, becoming the world' s largest independent videogame publisher, in a deal valued at USD 18.9 billion, GamesIndustry.biz reports.

The new company, Activision Blizzard, now boasts a portfolio bursting with some of the top-selling videogame franchises including Blizzard' s World of Warcraft, Starcraft and Diablo, Vivendi' s Crash Bandicoot and Spyro and Activision' s Guitar Hero, Call of Duty and the Tony Hawk series.

Activision shareholders are to receive USD 27.50 a share, a 24 per cent premium over Friday' s close of USD 22.15. Vivendi Games will contribute USD 1.7 billion in cash to the company and take a 52 per cent stake.

" This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector," commented Jean Bernard Levy, CEO of Vivendi.

" The combined strength of the existing management teams at both companies will set the stage for further profitable growth of Activision Blizzard.

" We look forward to being an active and supportive majority stockholder in a company that is poised to lead the worldwide interactive entertainment industry in the years ahead," he said.

Shares of Vivendi Games will be converted into 295.3 million new shares of Activision, which values Vivendi Games at USD 8.1 billion. Vivendi will also purchase 62.9 million newly issued shares in Activision for USD 1.7 billion in cash.

" By combining leaders in mass-market entertainment and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences," commented Robert Kotick, CEO of Activision.

" By joining forces with Vivendi Games, we will become the immediate leader in the highly profitable online games business and gain a large footprint in the rapidly growing Asian markets, including China and Korea, while maintaining our leading operating performance across North America and Europe," he added.

Kotick will remain as chief executive of Activision Blizzard, while Vivendi Games boss Bruce Hack will become vice chairman and chief corporate officer. He will also lead the merger, expected to be compete in the first half of 2008.

Activision also said that it will now have access to Universal Music Group, the world' s largest music company, " which will benefit Guitar Hero and further extend our sizeable leadership position in music-based games."