Activision Blizzard Sued Over Vivendi Buyback

[Shawn Zipay]

This is the story that just keeps on giving. A couple of weeks back, the news broke that Activision Blizzard was saying "goodbye" to their former majority owners, Vivendi, with an $8.2 billion buyout. Today comes word that Activision Blizzard is now being sued over this move.

One man, a shareholder in the company, Todd Miller, has filed a complaint against Activision Blizzard to try and stop the deal from going through.

The suit alleges breach of fiduciary duties, waste of corporate assets and unjust enrichment on the parts of Vivendi as well as Activision Blizzard and its board of directors. The plaintiff claims the deal shortchanges shareholders by selling 172 million shares to Kotick and Kelly's investment group at a 10 percent discount on the company's closing price the day before the deal was announced. That discount effectively gives the group an instant windfall of $664 million, allowing Kotick and Kelly to take control of the company without benefiting Activision Blizzard or its existing shareholders, according to the complaint. (If the deal goes through, the investment group would be Activision Blizzard's largest shareholder.)

"(T)here was no apparent business purpose in allowing the insider investor group to participate in the discounted stock offering, other than to aggrandize defendants Kotick and Kelly and provide billions of dollars' worth of Activision stock to the insider investor group at a discounted price," the lawsuit states.

Miller goes on to claim that Vivendi is desparate for a quick buck given how it's sitting on $17 billion in debt. So what's Miller's issue here? Well, this move apparently created "conflicts of interest" for the majority of Activision Blizzard's board of directors, since six of them also serve as board members or are executives at Vivendi. He says that this move from these particular board members to improve the situation at Vivendi rather than benefit Activision Blizzard shareholders.

Miller is attempting to halt the transaction on the basis of it being "one-sided self-dealing." Well, good luck to him on that.

(via GI.biz)

[cikame]

A collective of ferrets.