Activision Settles Court Case Over Buyout Led By CEO Kotick With $275 Million Settlement
Last year, Activision CEO Bobby Kotick and co-chairman Brian Kelly participated in the $8 billion buyout of former parent Vivendi. The pair contributed a combined $100 million of personal funds as part of a group that now holds 24.9 percent of company shares.
Following that event, which came as Vivendi threatened to drain billions of Activision’s cash reserves, multiple company shareholders sued. The legal actions were brought to stop the deal, which were alleged to offer a discounted purchase rate on stock not offered to most shareholders.
Activision has now settled these suits, with defendants paying $275 million to the company. The publisher will also appoint two new, unaffiliated board members, to mitigate concerns that Kotick is now so entrenched he cannot be removed from his position.
The settlement also includes payment of plaintiff court fees and adjustments to voting rules. As is customary, defendants will be released from further claims against them.
I’m not surprised that Activision opted to settle, but the addition of two new, unaffiliated board members is a bit surprising. The settlement is also fairly significant, amounting to more than 10 percent of the Kotick/Kelly group’s buyout amount of $2.34 billion. We’ll likely never know the details of the conversations, but it seems from the agreement that Activision acquiesced to substantial requests.