The merger is a $18 billion deal. And for those confused by the new name, remember that Blizzard Entertainment (makers of WarCraft, StarCraft, and Diablo) is actually owned by Vivendi Universal. Activision publishes some noteworthy titles such as the Call of Duty series, Guitar Hero, and Tony Hawk.
Read the press announcement here.
Not sure what to think about this personally. I do see this as a move to further put a lot of competitive pressure on EA in the publishing business.
EDIT: Oh yeah, this allows Activision to have access to Universal Music Group, the world's largest music company. Imagine the song list for Guitar Hero from now on.
EDIT 2: My memory is coming back. All these developers will be under one roof now: Bizarre Creations (PGR series), Infinity Ward (Call of Duty), Neversoft (Tony Hawk), RedOctane (Guitar Hero), Blizzard Entertainment (War/StarCraft/Diablo), and Sierra Entertainment (World In Conflict).