The ruling follows a challenge to the deal, filed last week, by a minority shareholder who successfully argued that the transaction should be subject to approval by a majority of Activision's minority shareholders.
Vivendi in July agreed to sell a 49.1% stake in Activision, leaving the Paris-based group with an about 3.9% holding. The deal involved the sale of 429 million shares in Activision to the Santa Monica, Calif.-based company, and 172 million shares to ASAC II LP, an investment consortium led by Activision CEO Bobby Kotick and co-chairman Brian Kelly.
"The Delaware Chancery Court, in Hayes v. Activision Blizzard, Inc., preliminarily enjoined the previously announced concurrent transactions between the Company [Activision] and ASAC II LP, on the one hand, and Vivendi SA, on the other hand, halting the closing of the transaction unless the injunction is modified on appeal or the transaction is approved by a stockholder vote of the non-Vivendi stockholders," Activision said after the market closed on Thursday, Sept. 18.The maker of World of Warcraft and Call of Duty video games said it remained committed to the deal and "is exploring the steps it will take to complete the transaction as expeditiously as possible." The injunction raises the prospect that the deal will not close by an Oct.15 deadline, after which any of Vivendi, Activision or ASAC II have the option to terminate their agreement. Unless Activision wins an appeal against the injunction it will have to call an extraordinary general meeting, a process that usually requires 60 days' notice. A vote amongst non-Vivendi shareholders is likely to approve a deal that was struck at $13.60 per share, about 5% below Activision's Wednesday closing share price of $17.15. "We see a modest risk that Vivendi sees it left money on the table from the original transaction and seeks to modify the purchase agreement," Bank of America Merrill Lynch analysts Justin Post and Ryan Gee wrote Thursday. "However, we still think Vivendi has few other options without a willing buyer."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV