Activision Blizzard shareholder Todd Miller filed a derivative lawsuit on Thursday against the company and other parties associated with an $8.17 billion deal to buy back a controlling interest from major stakeholder Vivendi. In his lawsuit filed in Superior Court, Miller claims that the deal to buy back stock from Vivendi gives "insiders" a windfall of more than $600 million on the discounted sale of stock from Vivendi, while Activision Blizzard shareholders get no enrichment from the deal.
Activision Blizzard's plan is to buy back buy 439 million of Vivendi's shares for $5.83 billion, and Kotick's investor group will pick up 172 million shares in a private sale for $2.34 billion - at a ten percent discount on Activision's closing price the day before the deal was announced.
"Upon closing of the deal, the insider investor group will become the company's largest shareholder, holding approximately 172 million shares, or approximately 24.9 percent of the outstanding common stock," the complaint states.
Miller's complaint claims that the investor group will "score an immediate paper windfall of $664 million," but the private sale does not benefit Activision shareholders in any way. He also notes that this move gives Kotick's group a majority stake in the company, and that at least six Activision Blizzard directors have conflicts due to their close ties to Vivendi (many were placed on the board due to Vivendi's majority stake in the company).
Miller's complaint asks the court to rescind the purchase agreement and order Activision to institute controls to "prevent future one-sided self-dealing." The lawsuit names Activision Blizzard CEO Robert Kotick, co-chairman Brian Kelly, and Activision directors Philippe Capron, Robert Morgado, Robert Corti, Richard Sarnoff, Frederic Crepin, Regis Turrini, Lucian Grainge, Jean-Yves Charlier, and Jean-Francois Dubos. Vivendi S.A. and Activision are also named as parties. Miller is represented by Stephen Oddo with Robbins Arroyo of San Diego.
Source: Courthouse News