Activision-Blizzard Shareholder Takes Legal Action To Stop The Vivendi Buyout
In late July it was announced that Vivendi will be removed from the holding of Activision-Blizzard. By stepping back, Vivendi would be making way for new parties to take control of the corporation–two of which are executives Bobby Kotick and Brian Kelly. The end goal for the deal would see the publisher own itself, alongside the investments of Kotick and Kelly.
However, there seems to be a slight hiccup. An Activision-Blizzard shareholder named Todd Miller has filed a complaint against the company to stop the aforementioned buyout from going through.
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According to the complaint, Miller alleges that the deal not only contains a breach of fiduciary duties, but also a waste of corporate assets and unjust enrichment. These claims are targeted towards both Vivendi, Activision-Blizzard and the board of directors. Miller notes that the deal will see 172 million shares sold to Kotick and Kelly’s investment group at a 10 percent discount on the company’s closing price on the day before the deal was announced.
This agreement would lead to an instant windfall of $664 million, and also allowing Kotick and Kelly to take control of the company without benefiting Activision-Blizzard or its shareholders. Essentially, $664 million would not go to shareholders of the company.
“(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.
Due to Vivendi’s dire need for cash, as it is in $17 billion in debt, the current buyout situation creates a conflict of interest for majority of the directors and shareholders of the various companies. Various directors for Activision-Blizzard are also executive members of Vivendi, whereby they will retire from their roles at Activision-Blizzard once the deal goes through. Miller alleges that these directors are showing a preferential treatment to Vivendi as opposed to a balance between the companies.
Miller’s lawsuit is aimed at asking for rescission of the deal, as well as for a judge to prohibit such “one-sided self-dealing” in the future.