The Deal: Delaware Supreme Court Reverses Laster on Activision Deal
NEW YORK (TheStreet) ¿¿ Activision Blizzard
The video game maker had not provided for such a vote, but a shareholder sued on the grounds that the company's charter required one.
The stock jumped on the news to $17 from its open of $16.28 a share. The Supreme Court issued its decision around noon after hearing an hour of argument in the matter.
Under the terms of the deal, Activision agreed to pay $5.83 billion for Amber Holding, a wholly owned subsidiary of Vivendi whose primary assets are 428 million Activision shares and $676 million in net operating losses. As part of the purchase agreement, ASAC II LP, an investment group led by Activision CEO Robert Kotick and co-chairman Brian Kelly, will pay $2.34 billion for another 172 million Activision shares, a 24.9% stake in Activision. The market cheered the news, since the $13.60 a share that both Activision and ASAC were to pay was a 10% discount to Activision's trading price before the deal was announced on July 26.
Nevertheless, Activision shareholder Douglas Hayes claimed that the transaction was a "merger, business combination or similar transaction" under the terms of the company's charter. Activision argued that the deal was a stock buyback and therefore did not require shareholder approval. Laster found for Hayes, and Activision asked for and was granted an emergency appeal to the Supreme Court.
The Supreme Court issued a one-paragraph order in which it wrote, "The stock purchase agreement here contested is not a merger, business combination or similar transaction. An opinion will follow in due court."
Michael Hanrahan and Gary Traynor of Prickett, Jones & Elliott represented Hayes along with Eric L. Zagar and Robin Winchester of Kessler, Topaz, Meltzer & Check in Radnor, Pa. The defendants are using several firms in the litigation. Activision tapped Edward P. Welch and Edward B. Micheletti of Skadden, Arps, Slate, Meagher & Flom in Wilmington.
Activision independent directors Robert J. Corti, Robert J. Morgado and Richard Sarnoff turned to William Savitt of Wachtell, Lipton, Rosen & Katz. The investor group led by Kelly and Robert Kotick used Diane L. McGimsey of Sullivan & Cromwell in Los Angeles. Vivendi turned to Michael Farhang of Gibson, Dunn & Crutcher in Los Angeles.
--Written by David Marcus in New York