Activision Blizzard Inc., publisher of “World of Warcraft” and “Call of Duty,” has received court approval for a $275 million settlement. Delaware Court of Chancery Vice Chancellor J. Travis Laster gave approval to the settlement, which was tentatively reached with Activision leaders in November. It resolves allegations that CEO Bobby Kotick and Chairman Brian Kelly put their own interests over those of other shareholders when an investment vehicle they control bought more than $2 billion worth of stock concurrent with the California video game giant’s $5.8 billion equity buyback from its former majority stakeholder.
Under the terms of the agreement, certain Defendants and insurers will pay Activision $275 million, while Kotick and Kelly would agree to reduce their voting power from 24.9 percent to 19.9 percent and add two independent directors to the company’s board. Vice Chancellor Lester stated:
The monetary consideration of $275 million is the largest cash recovery ever achieved on stockholder derivative claims. The magnitude of the settlement reflects that lead counsel advanced strong claims for breach of the duty of loyalty. That does not mean that the claims were without risk.
Vice Chancellor Lester referred to the transaction as a “restructuring” in the opinion because it redrafted Activision’s governance and shareholder structure. Activision Blizzard Inc. investors had urged a Delaware Chancery judge in March to overrule an objection from a dissenting shareholder and bless the settlement with company leaders that would end derivative and class action litigation over an $8.2 billion deal to buy back Vivendi SA’s controlling stake in the game publisher.
It was reported that under the Vivendi deal, Activision bought back $5.8 million worth of shares at $13.60 each from the French conglomerate, while Kotick’s and Kelly’s group took $2.3 billion worth of the remaining shares and gained $664 million.
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