Activision, Vivendi Appeal Frozen Buyback Ruling

Looks like Activision’s offer to settle fell on deaf ears.

That’s 100% speculation, but it makes sense given the circumstances. But I’m getting ahead of myself.

According to the Wall Street Journal (subscription required), Activision-Blizzard and parent company Vivendi Universal have filed an emergency appeal of last week’s ruling that halted their $8 billion buyback agreement. They’re now set to appear in the Delaware Chancery Court on October 10 to make their case, and it better be a good one. If the original deal, which has Activision-Blizzard buying itself back from Vivendi through a two-part share purchase, is not completed by October 15, it will be terminated.

How did we get here? On July 25, Activision-Blizzard announced its split from Vivendi Universal in a mega deal that was only “subject to customary closing conditions.”

Those closing conditions were never met, because on September 11, Activision-Blizzard shareholder Douglas Hayes filed suit, asking a Delaware court to stop the proposed stock sale. His suit claimed that the deal would “give control” of the company to CEO Bobby Kotick and Co-Chairman Brian Kelly and “unjustly enrich Kelly, Kotick and the other participants.” According to reports, Hayes is referring to Kotick and Kelly’s investment group gaining control of 25% of Activision-Blizzard while pocketing as much as $644 million in the deal. Hayes wants non-Vivendi shareholders to put the whole thing to a vote.

On September 18, the Delaware Chancery Court agreed with Hayes and preliminarily enjoined the sale, preventing the closing of the transaction. That meant the deal would either have to be put up for a vote or Activision would have to settle.

And that’s why I think an offer to settle fell on deaf ears. It was the easiest, quickest way to push the deal through, and the most logical action for Activision to take.

Which brings us to today. Activision and Vivendi argue that the court’s injunction “irreparably harms” minor shareholders who would benefit from the deal. They also say there is no way they can get Activision’s shareholders together for a vote before the October 15 deadline.

We’ll see what the court thinks of that on October 10. For now, Activision-Blizzard is still a Vivendi-owned game publisher.

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