The lights are on
Activision Blizzard was hoping to buy out Vivendi and gain its autonomy – a move that would have prevented the French media company from bleeding the game developer/publisher's reserves. However, a recent court order throws the transaction into jeopardy.
The stock buyback didn't make everyone happy; two shareholders filed suits against against Activision, the first claiming the deal was only to "aggrandize defendants Kotick and [Activision co-chairman Brian] Kelly and provide billions of dollars' worth of Activision stock to the insider investor group at a discounted price." The second suit seeks an injunction, and also claims that Activision board members stand to improperly benefit from the deal.
According to an Activision press release, the Delaware Chancery Court issued an injunction that prevents the deal from closing, "halting the closing of the transaction unless the injunction is modified on appeal or the transaction is approved by a stockholder vote of the non-Vivendi stockholders." Without the ability to finalize the deal, the game company can't stop Vivendi from paying down its debt using Activision Blizzard funds.
Activision claims that it is "committed to the transaction and is exploring the steps it will take to complete the transaction as expeditiously as possible." We reached out to Activision to get clarification on timing and process. We'll update should we hear back.
Our Take (by Mike Futter)This is bad news for Activision. If Activision can't get the courts to modify the injunction or get the non-Vivendi shareholders to vote in favor of the deal, the company is back where it started. It won't be able to free itself from Vivendi, at least not how it intended, and could be facing a cash drain of $3 billion through the previously threatened "special dividend." This would drain Activision's cash reserves, force the company to bring money back in from overseas (and assume the related tax liability), and at the end have nothing to show for it.
Given that this is still a single-party civil case, it could still be settled, paving the way for the transaction to go through as originally planned. That could open the door for other shareholders to file similar claims. I have to believe that Bobby Kotick is currently working to secure votes from as many eligible shareholders as he possibly can.
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Rich people using money to sue their rich companies to get richer
It certainly is odd to go on a game magazine website and instead learn about all of the money grabbing schemes of suits.
Thank you Robert Kotick, your work is appreciated.
The picture for this is great. The guy just looks like "Really....F#$@ing really judge."
I can help but feel a little warm and cozy inside. I was utterly disgusted by how money hungry Activision had become. I don't wish the companies demise but Kotic's fat money sucking ass can use some humility. This what you get for ruining Diablo... muwhahahahahaha
Yeesh. Of course someone had to throw a monkey wrench into this. I hope Activision is still able to free themselves of Vivendi without being gutted in the process.