Sierra (and Papyrus) Acquired by Vivendi

Havas Interactive, operating as Vivendi, are buying Papyrus and it’s parent company Sierra according to a recent news update from GameCenter. Apparently the whole deal will cost them $985M.

In many ways this could be seen as much of a rescue. Cendant and Sierra have been closing studios and laying off staff constantly for the past couple of years.

Their news item:

Employees at Sierra On-Line, Blizzard Entertainment, and other Cendant Software companies are digging out their old French-English dictionaries, as Cendant announced today the sale of its consumer software division to a French company.

After months of rumors regarding potential buyers, Cendant said that it has agreed to sell Cendant Software and its subsidiaries to Havas for as much as $985 million in cash. The Paris-based company is a business unit of French utility Vivendi SA, France’s largest water utility. With more than 220,000 workers, Vivendi has interests in telecommunications, transport, and the media. The company also owns 50 percent of AOL France and is part owner of Canal+, the largest pay television service in Europe.

Cendant Software is the parent company of Sierra, Blizzard, Davidson & Associates, and Knowledge Adventure. Combined, these units make Cendant Software one of the largest publishers of educational and entertainment software in the world.

Based in Bellevue, Washington, Sierra is one of the industry’s oldest and largest interactive entertainment software companies. Its large lineup covers the spectrum of genres, including action, strategy, sports, simulation, trivia, and adventure games.

Meanwhile, Blizzard is Cendant Software’s crown jewel. The Irvine, California-based company is responsible for best-sellers such as Diablo, StarCraft, and WarCraft II.

Under the deal, Vivendi will pay an initial $800 million in cash, with a subsequent $185 million in contingent payments to be made over the next year, depending on the performance of Cendant Software.

Due to the fact that Havas Interactive, a division of Havas, has no operations in the United States, Cendant Software said that it did not expect layoffs or any changes in its management, operations, and products. However, Cendant Software operations outside the United States would be examined. Under the deal, Chris McLeod will continue to serve as CEO of Cendant Software, reporting to Havas president Eric Licoys. Cendant Software will continue operating out of its Torrance, California-based headquarters, and the company will change its name. Current brand names such as Sierra and Blizzard will not be changed.

Cendant had made it known months ago that it was looking to unload its software unit. Cendant is primarily a travel and real estate services firm and marketing company, and the software unit never fit in with its core businesses. Moreover, after an accounting fraud scandal earlier this year, Cendant was slapped with numerous stockholder lawsuits. To help reduce its $4 billion debt, Cendant has been selling assets. The company could make as much as $450 million from the sale.

CUC International, which merged with HFS International last year to form Cendant, acquired both Davidson & Associates and Sierra in 1996, for a combined price of more than $2 billion.

Havas is France’s largest media company. Among its products, the company is well-known for its Lacrousse multimedia dictionaries. The acquisition of Cendant Software is part of the Havas’s strategy to expand its presence in Europe and the United States.

“With this acquisition, Havas is now playing in the big leagues of traditional and electronic publishing. Developing its multimedia pole is a real strategic priority for Havas,” said Vivendi chief executive Jean-Marie Messier in a statement. “This is a nice example of a European company reconquering a strong position vis-à-vis its U.S. rivals. In its business, Havas and Cendant Software are far ahead of other competitors, not only smaller European companies, but also major players like Microsoft.”

According to sources at Sierra’s Bellevue headquarters, the predominant feeling around the office is one of relief, with employees cracking French jokes and brushing up on their French accents. “We’ve been living under the uncertainty for so long–will we be purchased, will we spin off, who’s going to buy us, might we be split up?–that it turned into a weight on everyone,” said one employee, who wished to remain anonymous. “Now we know our fate and we can get on with things.”

Noted another Sierra employee: “Hey, at least it wasn’t Microsoft.”