Activision Blizzard’s separation from parent company Vivendi is now in danger after the Delaware Chancery Court called for a time out on the process, the company confirms. The move is connected to the ongoing Hayes v. Activision Blizzard Inc. lawsuit, which was filed several months after the buyout plans were announced in July 2013. This doesn’t mean that the buyout won’t happen, but either the injunction will need to be modified on appeal or the deal will need to be approved in a vote of non-Vivendi shareholders before it can be pushed through.
Shareholder Douglas Hayes moved to halt Activision Blizzard’s proposed stock buyout in mid-September 2013 with a lawsuit claiming that the company failed to seek approval for the deal from shareholders. The suit also targets Activision CEO Bobby Kotick and co-chairman Brian Kelly, both of whom are part of an investment group participating in the buyout. Under the terms of the July deal, Activision Blizzard was to buy back 429 million shares of stock from its former parent for $5.83 billion while the Kotick/Kelly group (which also includes Chinese investment firm Tencent Holdings) would buy another 172 million shares for $2.34 billion. Hayes’ lawsuit alleges that Kotick and Kelly, both of whom stand to maintain their leadership roles at the independent publisher, would have been “unjustly enriched through the private sale.”
In layman’s terms, Hayes is getting exactly what he wanted. The lawsuit sought an injunction so that non-Vivendi shareholders would have an opportunity to vote on the proposed buyout, and that is what’s happening. Activision Blizzard, for its part, confirms that it “remains committed to the transaction” and is right now “exploring the steps it will take to complete the transaction as expeditiously as possible.”
For more on the terms of the deal as it was originally announced and hefty offering of analysis, take a look at our original report on the news.