Last year's $18.9 billion merger between Activision and Vivendi Games (owner of World of Warcraft developer Blizzard) was one of the biggest news items of 2007 and sent shockwaves through the industry. As it turns out, however, negotiations weren't so smooth and the deal almost fell through a couple times.

According to the massive proxy statement filed with the SEC (in the section appropriately titled "The Transaction"), it was revealed that Activision and Vivendi management actually got together to discuss a possible merger as far back as November 2006. It wasn't until April and May of last year that talks really heated up, however. Representatives from Allen & Company and Goldman Sachs tried to outline "the premium to be paid with respect to Activision's common stock in connection with the proposed merger, share purchase and tender offer, and the aggregate number of shares to be tendered for by Activision in the post-closing tender offer."

After going back and forth over certain transaction terms, in June Jean-Bernard Lévy, Chairman and Chief Executive Officer of Vivendi called up Activision head Bobby Kotick "to advise him that, due to the meaningful differences between the two companies' proposals and lack of any apparent progress, he did not think it made sense to continue discussions concerning a possible transaction at that time."

After a few weeks of attempting to restart negotiations, in July Kotick called Lévy to present Activision's counter-proposal, which Lévy finally agreed was "generally acceptable." As the months went by, legal advisors prepared drafts of the proposed business merger, but near the end of August, suddenly another hurdle got in the way. After meetings between the two companies' management "there remained several material open issues with respect to corporate governance, management structure and the terms of the business combination agreement."

Again, legal advisors tried to hammer out the issues and Lévy and Kotick spoke on the phone several times as well to address the problems. As mid-September rolled around, "after little progress on the open issues, Mr. Kotick telephoned Mr. [Bruce] Hack [CEO of Vivendi Games] to inform him that, given the number of material open issues remaining, it did not made sense to continue discussions regarding a possible transaction at that time."

Then, however, Blizzard head Mike Morhaime and other Blizzard management had a positive effect on negotiations when they sat down for dinner with Activision's Kotick and discussed potential management structure. Talks resumed between Kotick and Lévy and by November the deal had finally been set in stone, with Blizzard management still running its studio and Kotick heading up the combined Activision Blizzard entity.