Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
By Michael Greene
May 20 — The Delaware Chancery Court May 20 approved a $275 million settlement arising from investor claims that Activision Blizzard Inc. officials improperly benefited from a billion-dollar buyout of Vivendi SA's stake in the “Call of Duty” video-game maker.
The $275 million settlement is believed to be the largest cash recovery approved by the court.
Vice Chancellor J. Travis Laster also awarded the lead counsel $72.5 million in fees and expenses, authorized lead counsel to make a $50,000 payment to the lead plaintiff and approved other non-monetary considerations.
In November 2014, Activision Chief Executive Officer Robert Kotick, Chairman Brian Kelly and other board members agreed to resolve shareholder lawsuits accusing the executives of unfairly reaping a windfall by leading a group that acquired $2.34 billion of Vivendi's Activision shares as part of the $8.2 billion buyout.
Despite declining to approve the stipulated settlement after a March 4 hearing, in order to resolve concerns raised by an objecting stockholder, Vice Chancellor Laster concluded in the May 20 opinion that the settlement was appropriate in light of the lead counsel's strong claims for breach of the duty of loyalty.
“Perhaps the most important task that the court has when considering a settlement in a representative action is to evaluate the adequacy of the settlement consideration,” he wrote. “In my view, the Settlement easily warrants approval.”
Laster also found that settlement negotiation process further supported approval. “The manner in which the Settlement was reached provides further evidence of its reasonableness. It resulted from a protracted mediation conducted by a highly respected former United States District Court Judge, with the negotiations taking place in the shadow of an impending trial,” he wrote.
“The negotiation process falls at the opposite end of the spectrum from the routine disclosure-only settlements, entered into quickly after ritualized quasi-litigation, that plague the M&A landscape.”
The court also determined that the allocation of the award was appropriate.
“The Settlement compromises both derivative and class claims. No consideration is passing directly to the Class. All of the monetary consideration flows to Activision, benefitting the Company directly and its current stockholders indirectly,” he noted.
“The Settlement allocates no consideration to the unarticulated personal claims belonging to the Class. This is reasonable,” he continued. “The Settlement was driven by the Delaware corporate law claims. The probable validity of the unidentified personal claims is non-existent, and the possibility that they might have led to a monetary recovery is entirely hypothetical.”
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
The opinion is available at http://www.bloomberglaw.com/public/document/IN_RE_ACTIVISION_BLIZZARD_INC_STOCKHOLDER_LITIGATION_No_8885VCL_2.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)