Wachtell, Skadden Preserve $8.2B Activision Blizzard Deal
The Delaware Supreme Court has approved the video game publisher Activision Blizzard Inc.'s plan to buy back $5.8 billion in shares from Vivendi SA, handing a major come-from-behind victory to lawyers at Wachtell, Lipton, Rosen, & Katz and Skadden, Arps, Slate, Meagher & Flom.
Reversing a ruling from the Delaware Court of Chancery, the court ruled Thursday that Activision's bylaws don't require the company to let non-Vivendi shareholders vote on the share buyback plan. Chief Justice Myron Steele announced the court's unanimous decision from the bench, following an oral argument Thursday morning. The court also issued a one-page order explaining its decision.
Under the terms of the deal, first announced in July, Vivendi will sell 427 million Activision shares back to the company for $5.83 billon. ASAC LP, an investor group spearheaded by Activision CEO Robert Kotick, will acquire another $2.34 billion in Vivdendi shares. The combined $8.2 billion deal has a termination date of Oct. 15.
Two plaintiffs firms — Prickett, Jones & Elliott and Kessler Topaz Meltzer & Check — brought a shareholder derivative suit over the deal on Sept. 11. The plaintiffs firms wanted an order blocking the deal, arguing that it amounted to either a merger or a business combination between Activision and Vivendi. Under Activision's bylaws and charter, mergers and business combinations required a shareholder vote. The defendants named in the complaint included Activision's board, ASAC, and a special committee of Activision's independent directors that signed off on the deal.
Delaware Vice Chancellor J. Travis Laster preliminary enjoined the deal on Sept. 18. Siding with the plaintiffs, he ruled from the bench that "the concept of business combination encompasses this deal."
The Delaware Supreme Court has now reversed. "The stock purchase agreement here contested is not a merger, business combination, or similar transaction," the court wrote. "We hold that there is no reasonable possibility of success on the merits."
Wachtell partner William Savitt, who represents Activision's special committee, argued on behalf of all the defendants. Michael Hanrahan of Prickett Jones argued for the plaintiffs. Skadden partners Edward Welch and Edward Micheletti represented Activision.
Jeff Mordock, a reporter at our affiliate Delaware Business Court Insider, has additional coverage here.