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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.”
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The opinion is available at http://www.bloomberglaw.com/public/document/IN_RE_ACTIVISION_BLIZZARD_INC_STOCKHOLDER_LITIGATION_No_8885VCL_2.
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