Hayes v. Activision-Blizzard moves foward into Court - Polidicks

This is a follow-up to this [url=http://facepunch.com/showthread.php?t=1296064&highlight=]story[/url]. [quote=Polygon]ctivision Blizzard is at the center of a new putative lawsuit instigated yesterday by shareholder Douglas M. Hayes of the company, it was revealed in an SEC filing from the firm. The "Hayes v. Activision Blizzard" suit will attempt to stop a stock sale that would give the company's co-chairman Brian Kelly, CEO Bobby Kotick and majority stockholder Vivendi control of the video game maker, claiming the company's board of directors and general partners violated provisions by failing to submit matters relating to stock for approval by a majority of its stockholders. Additionally, the suit states both the board of directors and Vivendi breached its duties by approving the purchase of 172 million shares of the company's common stock to ASAC for $2.34 billion, while claiming both Kotick and Kelly "usurped a corporate opportunity from the company" and will be "unjustly enriched through the private sale." The complaint seeks an injunction against the transaction, a rescission of the private sale and an order to Kotick, co-chairman and general partners to state the amounts they have "allegedly been unjustly enriched."[/quote] [url=http://www.polygon.com/2013/9/12/4722306/activision-blizzard-hit-with-lawsuit-by-shareholder]Source[/url]. You can read the full filing [url=http://investor.activision.com/secfiling.cfm?filingid=1104659-13-69337]here[/url]: [quote=Activison's site] On the afternoon of September 11, 2013, a purported shareholder of Activision Blizzard, Inc. (the “Company”) filed a putative class action and shareholder derivative action in the Court of Chancery of the State of Delaware, captioned Hayes v. Activision Blizzard, Inc., et al. , No. 8885. The complaint names our board of directors, Vivendi S.A. (“Vivendi”), Amber Holding Subsidiary Co. (“Amber”), ASAC II LP (“ASAC”), acting by ASAC II LLC, its general partner (“ASAC II” and, together with ASAC, the “ASAC Entities”), Davis Selected Advisers, L.P. (“Davis”) and Fidelity Management & Research Co. (“FMR”) as defendants, and the Company as a nominal defendant. The complaint alleges that the defendants violated certain provisions of the Company’s certificate of incorporation by failing to submit the matters contemplated by the stock purchase agreement dated July 25, 2013 by and among the Company, Vivendi and the ASAC Entities (the “Stock Purchase Agreement”) for stockholder approval by a majority of our stockholders (other than Vivendi and its controlled affiliates); that our board of directors and Vivendi committed breaches of their fiduciary duties in approving the purchase by ASAC of approximately 172 million shares of the Company’s common stock from Vivendi for an aggregate cash payment of $2.34 billion, or $13.60 per share (the “Private Sale”) immediately following the consummation of the Purchase Transaction (as defined below); that our Chief Executive Officer (“CEO”) and the Co-Chairman of our board of directors (“Co-Chairman”) usurped a corporate opportunity from the Company; that the board of directors and Vivendi have engaged in actions to entrench our board of directors and officers in their offices; that the ASAC Entities, Davis and FMR aided and abetted breaches of fiduciary duties by the board of directors and Vivendi; and that our CEO and our Co-Chairman, the ASAC Entities, Davis and FMR will be unjustly enriched through the Private Sale. References to “Purchase Transaction” herein refer to the acquisition by the Company, pursuant to the Stock Purchase Agreement, upon the terms and subject to the conditions thereof, of all of the capital stock of Amber, which at the time of purchase will be the direct owner of approximately 429 million shares of the Company’s common stock, in consideration of a cash payment of approximately $5.83 billion, or $13.60 per share, for the shares of Company common stock being acquired by the Company, before taking into account the benefit to the Company of certain tax attributes of Amber assumed in the transaction. The complaint seeks, among other things, a preliminary and permanent injunction of the Stock Purchase Agreement and the transactions contemplated thereby; rescission of the Private Sale; requiring the transfer to the Company of all or part of the shares that are the subject of the Private Sale; requiring measures to eliminate or mitigate the alleged entrenching effects of the Private Sale; ordering our CEO and our Co-Chairman, the ASAC Entities, Davis and FMR to disgorge to the Company the amounts by which they have allegedly been unjustly enriched; and alleged damages sustained by the class and the Company. In addition, the shareholder is seeking a temporary restraining order preventing the defendants from consummating the transactions and agreements contemplated by the Stock Purchase Agreement without shareholder approval. The Company believes the Purchase Transaction and the Private Sale are both in full compliance with the Company’s certificate of incorporation and were appropriately recommended by a Special Committee consisting of independent directors and appropriately authorized by the Company’s full board of directors. The Company does not believe that either the literal language of our certificate of incorporation or its spirit or intent supports the alleged claims. The Company intends to vigorously defend against such claims. Further, the Company believes there are significant benefits to its stockholders in proceeding with the transactions contemplated by the Stock Purchase Agreement, including, among others, the overwhelmingly positive market reaction to the announcement of the Purchase Transaction, the expected accretion to the Company’s earnings per share and the removal of a controlling shareholder, Vivendi, which will allow for the Company’s current minority shareholders to take a majority ownership position in the Company following the anticipated consummation of the Purchase Transaction. The outcome of all litigation is inherently uncertain, but the Company believes it has meritorious defenses. Date: September 12, 2013 ACTIVISION BLIZZARD, INC.[/quote]

i'm confused, is this a good or a bad thing?

[QUOTE=Wizards Court;42169269]i'm confused, is this a good or a bad thing?[/QUOTE] If they fail, the company's Co Chairmen, Bobby Kotick, and some Vivendi stockholders will have a larger amount of control over the company, which is obviously not a good thing.

[QUOTE=Wizards Court;42169269]i'm confused, is this a good or a bad thing?[/QUOTE] If they win, Activision goes back to Vivendi, a company that is only afloat at the moment from the buyback. If they succeed they will become the new THQ and all the IPs get auctioned off. [editline]12th September 2013[/editline] [QUOTE=JCDentonUNATCO;42169485]If they fail, the company's Co Chairmen, Bobby Kotick, and some Vivendi stockholders will have a larger amount of control over the company, which is obviously not a good thing.[/QUOTE] So you rather a company go bankrupt then?

how does this affect Blizzard? I don't really care about Activision

[QUOTE=Fangz;42169522]If they win, Activision goes back to Vivendi, a company that is only afloat at the moment from the buyback.[B] If they succeed they will become the new THQ and all the IPs get auctioned off. [/B] [editline]12th September 2013[/editline] So you rather a company go bankrupt then?[/QUOTE] the next western gaming crash?

[QUOTE=IliekBoxes;42170889]how does this affect Blizzard? I don't really care about Activision[/QUOTE] They more or less merged recently. (they did before, but blizzard had a couple of veto powers which recently ran out) [QUOTE=AlienFanatic;42171481]the next western gaming crash?[/QUOTE] THQ didn't crash because they weren't making money. They crashed because they fucked up the loan on the Udraw thing and weren't making enough profit to offset it. Most of their own IP games were profitable and decently.

[QUOTE=IliekBoxes;42170889]how does this affect Blizzard? I don't really care about Activision[/QUOTE] Basically all their IPs would be auctioned off along with the other Activision IPs if this stockholder gets his way. I still don't understand why stockholders would rather have a company go under than be bought out. THQ had a company that was going to bail them out until stockholders got involved.

[QUOTE=Fangz;42172189]Basically all their IPs would be auctioned off along with the other Activision IPs if this stockholder gets his way. I still don't understand why stockholders would rather have a company go under than be bought out. THQ had a company that was going to bail them out until stockholders got involved.[/QUOTE] Less money for them. Basically with a buyout they basically only get what is essentially counted and deemed as an acceptable price. With a piecemeal auction they have the ability to get much more potentially.

[QUOTE=Fangz;42169522]If they win, Activision goes back to Vivendi, a company that is only afloat at the moment from the buyback. If they succeed they will become the new THQ and all the IPs get auctioned off.[/QUOTE] So either they win, or they succeed? I don't understand

[QUOTE=wraithcat;42172514]Less money for them. Basically with a buyout they basically only get what is essentially counted and deemed as an acceptable price. With a piecemeal auction they have the ability to get much more potentially.[/QUOTE] But is a quick payout really worth the dissolvement of a company, and thousands of people losing their jobs? [editline]12th September 2013[/editline] [QUOTE=smurfy;42172564]So either they win, or they succeed? I don't understand[/QUOTE] If Hayes wins the lawsuit, Activision will become the next THQ.