By Peg Brickley
DOVER, Del.--Delaware's highest court Thursday struck down an
injunction that has been holding up Vivendi SA's (VIV.FR) exit from
its control stake in videogame maker Activision Blizzard Inc.
(ATVI).
"There is no reasonable possibility for success on the merits"
of a shareholder attack on the deal, Chief Justice Myron Steele
said, speaking for a unanimous five-person panel at the conclusion
of a hearing before the Delaware Supreme Court.
The ruling is a victory for Vivendi and Activision, which said
an injunction issued last month by Delaware's Court of Chancery
endangered an $8.2 billion transaction.
"We're absolutely delighted and look forward to completing a
deal very shortly," a Vivendi spokesman said.
With terms of the arrangement that will allow Vivendi to return
Activision to the control of public shareholders set to expire next
week, the companies scrambled to get before the Delaware Supreme
Court to upset the injunction.
"The lower court's order has stopped this deal in its tracks,"
said Wachtell, Lipton, Rosen & Katz's William Savitt, the
attorney who spoke for Vivendi and Activision at Thursday's
hearing.
Welcomed by the market, the transaction added about $1 billion
to Activision's value shortly after it was announced. Those gains,
and the prospects that Activision's public shareholders would be
able to take charge of the company, were put at risk by continued
uncertainty about the deal, Vivendi and Activision argued.
Shareholders sued on the grounds that they're entitled to vote
before the transaction goes through.
"The market says it's a good deal, they say. But the market
doesn't get to decide," said Prickett, Jones & Elliott's
Michael Hanrahan, arguing for the shareholders.
Vice Chancellor Travis Laster of the Court of Chancery sided
with the shareholders and ordered Vivendi and Activision to hold up
the transaction until shareholders are polled. He relied on
corporate provisions that said shareholders would get to vote on
business combinations.
Mr. Savitt said the transaction is the opposite of a business
combination. "To the contrary, the transaction marks Vivendi's exit
from Activision as its controlling shareholder," he said.
Chief Justice Steele, speaking for the court, agreed. "The stock
purchase agreement here contested is not a merger, business
combination or similar transaction," he said.
The planned sale of the Activision stake--down to about 12%
initially--is part of Vivendi's strategy to reshape itself as a
smaller media company. It plans to use the proceeds of the sale,
along with another potential deal, to sell its stake in African
phone operator Maroc Telecom (IAM.CL) to pay down debt, allowing it
to spin off French phone operator SFR.
-Sam Schechner contributed to this article.
Write to Peg Brickley at peg.brickely@wsj.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires