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Activision-Vivendi News: Will the Deal Go Through?

Activision Vivendi news: After Delaware Court of Chancery judge Travis Laster temporarily stopped Vivendi SA (EPA:VIV)’s planned $8.2 billion sale of most of its 61% stake in Activision Blizzard, Inc. (NASDAQ:ATVI) last Wednesday, the companies have filed an emergency appeal in the hope that the ruling is reverted. The decision was a consequence of a lawsuit filed by a minority shareholder, Douglas Hayes, who argued that the company infringed on its obligation to shareholders by not submitting the deal to a stockholder vote.

The court decided that the transaction should be subject to the approval by a majority of Activision’s minority shareholders. Nevertheless, spokespersons at both firms assured that they remained committed with the deal going through; and this appeal certainly backs up their sayings.

Activision Blizzard, Inc. (NASDAQ:ATVI)

Activision’s lawyers declared that “the injunction leaves Activision and its stockholders in limbo and at risk of losing an $8 billion deal that will return the company to public control.” Meanwhile, Vivendi argues that the proposed deal is nothing but a share buyback. However, this is not the judge’s view. He contends that “the transaction is a business combination requiring a vote” (WSJ).

In response to Vivendi and Activision’s appeal, the Delaware high court scheduled a hearing for Oct. 10th.  However, the deal is in serious jeopardy. If the appeal does not go through as expected, the exchange will fall because an extraordinary general meeting usually requires 60 days´ notification, while the agreement between Activision and Vivendi is only valid until Oct. 15th. After this date, any of the parts involved have the option to back out of the transaction.

“Delaware’s Supreme Court has a reputation for quickly resolving appeals in large corporate disputes. The court ruled from bench last year to uphold a Court of Chancery decision to halt a hostile bid by Martin Marietta Materials Inc for Vulcan Materials Co.” (Reuters). All that’s left to do now is waiting. In the meantime, Activision’s stock started to drop (slowly), while the risk of the $1 billion gains the stock made after the deal was announced continues to increase. Check back here for more Activision Vivendi news.

Disclosure: Javier Hasse holds no position in any stocks mentioned

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