Vivendi (EPA: VIV) SA and Activision (NSDQ: ATVI) announced plans for a merger valued at $18.9 billion that would bring together Guitar Hero, Spider-Man X-Men, and World of Warcraft, among other brands.

-- Under the terms, Vivendi would hold a roughly 52 percent majority of the merged company by contributing Vivendi Games, valued at $8.1 billion, and $1.7 billion in cash.

-- Vivendi’s contribution includes Blizzard Entertainment, owner of MMORPG WoW, which projects 2007 revenue of $1.1 billion and roughly $520 million profit.

-- Activision would then be renamed Activision Blizzard and continue to operate on Nasdaq as ATVI. Within five days of the closing, Activision Blizzard would launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision shares at $27.50—a 31 percent premium over 20 days and 24 percent of Friday’s close of $22.15; Vivendi has agreed to purchase up to $700 million of new shares at the same price.

-- They hope to close the deal in the first half of 2008.

-- Management:  Activision CEO Robert Kotick will be president and CEO; Bruce Hack, current CEO of Vivendi Games, will serve as vice-chairman and chief corporate officer, responsible for leading the merger integration and the finance, human resources and legal functions; Mike Griffith will be president and CEO of Activision Publishing (including the Sierra Entertainment, Sierra Online and Vivendi Games Mobile divisions in addition to the Activision business; Mike Morhaime will continue to serve as president and CEO of Blizzard Entertainment. Thomas Tippl, currently CFO of Activision, will become CFO, while Jean-François Grollemund, currently CFO of Vivendi Games, will be appointed chief accounting officer of the new company.

The companies say Activision Blizzard would have the highest operating margins of any major third-party video game publisher and approximately $3.8 billion in pro forma revenues for 2007. More details in the joint release. (PDF here.)

WSJ: Even as Activision was enjoying success with its top console games, the firm’s Chief Executive Robert Kotick said the success of World of Warcraft made him eager to get into on-line games. But he couldn’t figure out how Activision could do it on its own. “It has always been my aspiration to be the number one videogame company,” Mr. Kotick said. “This gets us to be number one in revenue, profitability and position.”

NYT:  “Even as the deal puts Activision Blizzard in the top spot in terms of revenue, the question that will face investors is whether Activision can duplicate the business model of Electronic Arts (NSDQ: ERTS). ... Activision, based in Santa Monica, Calif., has been an industry darling of late, in large part because of the popularity of Guitar Hero III, the latest iteration of the franchise. It was introduced on Oct. 28, and sold 1.3 million copies within seven days. Through October, Activision had three of the eight best-selling games in the United States this year, according to NPD Group, which compiles sales data. ... Mr. Kotick also said that because Vivendi owns the Universal Music Group, the transaction “will benefit Guitar Hero and further extend our sizable leadership position in music-based games.”