Rumors Swirl Around Microsoft, Vivendi Game Unit

Like undead creatures in the video game WarCraft, it's the rumor that just won't die: French media conglomerate Vivendi(V) is said to be chatting up Microsoft(V) in a deal to sell off its video-game publishing unit.

Debt-strapped Vivendi has been rumored to be seeking a buyer for the publisher of games including Warcraft and Diablo as far back as last year, when its chief executive, Jean Marie Messier, was ousted. This week, the rumor resurfaced, and centered on Microsoft, as Vivendi has been gearing up to sell off chunks of the company to pare down debt.

Microsoft, meanwhile, may looking to bolster its lineup of games to justify its multibillion-dollar investment in video games for its game console, the Xbox, and for its online division, Xbox Live. The company also has been linked to potential acquisitions of Japanese game publishers Sega and Namco, as well as Activision(ATVI), in recent months. Fueling recent rumors was the departure of Sega's North American chief, Peter Moore. Microsoft tapped Moore to be corporate vice president in charge of sales and marketing in Europe and Japan for the Xbox and PC games divisions.

A Microsoft spokeswoman declined to comment. Vivendi Universal Games didn't return calls for comment.

"Microsoft is a likely acquirer," said Soundview Technology games analyst Shawn Milne. But he added, "I don't think it's a slam-dunk." Milne said Microsoft may not immediately be in the market for new acquisitions just months after it purchased game developer Rare from Nintendo last September for $375 million in cash. Rare developed the Donkey Kong game franchise.

Analysts say the sale, which has been the topic of industry-wide rumors for at least six months, is not likely to fetch Vivendi more than $1.1 to $1.5 billion, contrary to earlier speculation of a $2 billion price tag.