Second Activision Shareholder Files Suit To Stop Vivendi Split

by Mike Futter on Sep 12, 2013 at 03:12 AM

In Late July, Activision orchestrated a massive stock buyout to split itself from former parent Vivendi. The move was necessitated by a looming threat of a "special dividend" that would bleed the Call of Duty publisher of billions in cash reserves. In August, a shareholder objected, filing suit. Now, a second stockholder has done the same.

In a new Securities Exchange Commission (SEC) filing, Activision has addressed a suit filed by Douglas Hayes in the state of Delaware. The complaint alleges that Activision board members improperly benefitted from the deal and breached their financial responsibility to shareholders in the process.

Hayes seeks an injunction on the completion of the deal. Activision's filing indicates that it maintains the stock transfer was in compliance with the publisher's articles of incorporation and that officers were acting in the best interest of shareholders.

Activision orchestrated an $8 billion buyout that saw $5.83 billion in stock buyback, with another $2.34 billion acquired by an investor group that includes Chinese company Tencent and is led by CEO Bobby Kotick and co-chairman Brian Kelly. The two contributed a combined $100 million to the deal.

[Source: Activision Investor Relations]


Our Take
Had Activision and Kotick and Kelly's investor group not pulled together the funds for a buyback, Activision would have seen itself in enormous financial trouble with nothing to show for it. Both Hayes and Miller (the other shareholder filing suit) know this and are likely angling for a settlement rather than the injunctive measures listed in the suits.