Unhappy Shareholder Sues Activision Over Vivendi Buyback

Unhappy Shareholder Sues Activision Over Vivendi Buyback

Activision logo

Activision is being sued by a shareholder who says the plan to buy its independence from Vivendi is just a power grab by CEO Bobby Kotick.

Activision announced at the end of July a plan to acquire roughly 429 million of its own shares from current parent Vivendi at a cost of more than $5.8 billion. CEO Bobby Kotick said the company "should emerge even stronger [from the buyback] - an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value."

But shareholder Todd Miller doesn't agree with that assessment. He's filed a "shareholder derivative complaint" against Activision, its board of directors and Vivendi, alleging "breach of fiduciary duties, waste of corporate assets and unjust enrichment."

An investment group led by Kotick will acquire 172 million shares in a private sale at a ten percent discount on Activision's closing price the day before the deal was announced, making it the largest shareholder in the company and resulting in an "immediate paper windfall of $664 million," according to Miller. But the deal also allows Kotick and Co-Chairman Brian Kelly to "usurp" the company, he claimed, without actually providing any benefit to Activision or its individual shareholders.

"There was no apparent business purpose in allowing the insider investor group to participate in the discounted stock offering, other than to aggrandize defendants Kotick and Kelly and provide billions of dollars' worth of Activision stock to the insider investor group at a discounted price," Miller claims in his suit. He also alleged that at least six of the 11 members of the Activision board have conflicting interests because of their close ties to Vivendi and claimed that they "have no incentive to resist Vivendi's push, as they are all retiring from their roles as Activision directors upon consummation of the transaction."

Miller wants the court to deep-six the deal and force Activision to implement systems that will "prevent future one-sided self-dealing."

Source: Courthouse News Service

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Nevermind doing something sensible like selling your shares in a company you disagree with. No, let's sue the company and degrade the value of those shares. Dumbass litigious motherfuckers.

"HOW DARE THIS COMPANY WISH TO PROTECT ITS ASSESTS AND HUMAN RESOURCES BY BUYING THEMSELVES FROM UNDER A COMPANY THAT WANTS TO RUN THEM INTO THE GROUND! I'M GONNA SUE THEM FOR TRYING TO PROTECT THEIR INVESTMENTS AND IP!"

Sound business logic there.

MinionJoe:
Nevermind doing something sensible like selling your shares in a company you disagree with. No, let's sue the company and degrade the value of those shares. Dumbass litigious motherfuckers.

Don't forget been a dumpass for not seeing that Vivendi was gonna drop their dept on Activision, thus might has well spent that money you were gonna lose on becoming independent then throwing it away with no benefit.

MinionJoe:
Nevermind doing something sensible like selling your shares in a company you disagree with. No, let's sue the company and degrade the value of those shares. Dumbass litigious motherfuckers.

it actually makes sense.

You buy stock into a company, the company buy's itself out from a majority shareholder, nothing of real value is lost, business as usual.

However, the CEO of said company uses a internal investment group headed by himself stock from the buy-out at a major discount than what others would of had to pay for no justifiable reason other than for a personal profit rather than a corporate profit.

if the plaintiff has a sizable stock amount, then just selling all of his stock would also degrade the price of the stock.

If the case goes to the plaintiff, the activision-blizzard goes back to Vivendi, I assume, and another buy-out would be necessary with various rules applied such as his complaint that Kotick is buying a personal majority for personal gain.

If the case goes to the defendant, then Kotick gets rich and possibly becomes majority shareholder like how Vivendi was.

But honestly, the Stock Market is a vile place. To me a Stock Broker is a shitbag just as drugdealers are.

This is why our financial system is in ruins. People with money are to stupid to see a good deal when it pisses them in the face. It's really sad that the higher you go up the bank-account numbers the more IQ points people seem to lose from all the cocaine and heroin snorting.

Sure it will cost Activision money... guess what you are still getting your share of the profits each year. If I was a shareholder I would want to keep the company I am part of afloat for as long as possible rather than continuing being owned by a different corporation that was literally going to sink it for a bankruptcy scam. You already were being led by the nose by Vivendi, what changes when it's an internal group of shareholders calling the shots?

Stable income or certain ruinous debt? Apparently the later is the most enticing one.

PS: After defending Activision I have to say something bad about them or else I will explode. Bobby Kotick is probably just buying Activision so he can sell it off himself, after all the man hates videogames with a fiery passion, it's just that the money is so good he can't quit. This is really nothing else but the Miller shareholder pissing his pants because a different shareholder group will now be the big dogs and call all the shots in the company rather than Vivendi.

From what I understand, wasn't Vivendi going to pretty much take all of Activision's money and assets and leave it for dead? In which case buying out all of Vivendi's shares was a smart move, so I really dont see where this guy is coming from, or his point of view.

Laggyteabag:
From what I understand, wasn't Vivendi going to pretty much take all of Activision's money and assets and leave it for dead? In which case buying out all of Vivendi's shares was a smart move, so I really dont see where this guy is coming from, or his point of view.

Greed would be my guess.

Now, I don't really understand the business world that much, so if I'm wrong anywhere in here correct me but:

lololol well, I guess you can only poke a bear so much before it wakes up.

As much shit as I've given Kotick, this was a good move. Vivendi is hurting financially so they wanted to squeeze all the profits out of Activision. IMO if the rest of your company is suffering, the course of action should not be "Let's take all the money out of the profitable part, fire a bunch of people to drop costs and put it into the failing parts to make our numbers look good".

Imagine if you got laid off because your overseas branch dropped the ball, even while you were pulling in record numbers. That would kind of suck

I bet they're all just scared of having Kotick as their new boss, cause he'll probably fire all their asses.

I actually agree with the lawsuit. I have no problem with Avtivision buying out Vivendi but having the CEO able to purchase stock at a discount as part of that deal, while perhap legal, still seems shady to me.

Andy Chalk:
But the deal also allows Kotick and Co-Chairman Brian Kelly to "usurp" the company,

Seeing as it had been previously "usurped" by Vivendi in what appeared to be a similar fashion, I fail to see how Kotick et al. could possibly be in the wrong. At worst they're slightly less underhanded than the guys they were replacing. It's hard to sell Vivendi as the Duncan to Kotick's Macbeth.

Andy Chalk:
he claimed, without actually providing any benefit to Activision or its individual shareholders.

Even with my disdain for Kotick, I fail to see how he'd be worse than a company which has outright stated it intended to bleed Activision dry.

I vaguely suspected the asset draining thing was just leverage they were using in order to arrange the buy out in the first place, like a ridiculous offer in a bargaining exchange that gives you wiggle room for talking it down to the price you really want.

Laggyteabag:
From what I understand, wasn't Vivendi going to pretty much take all of Activision's money and assets and leave it for dead? In which case buying out all of Vivendi's shares was a smart move, so I really dont see where this guy is coming from, or his point of view.

You should try reading the article then as they explain it fairly well.

Laggyteabag:
From what I understand, wasn't Vivendi going to pretty much take all of Activision's money and assets and leave it for dead? In which case buying out all of Vivendi's shares was a smart move, so I really dont see where this guy is coming from, or his point of view.

No not so much leave them for dead, but put them into 'good debt' to fuel Vivendi's failings, yes. Being in debt doesn't necessarily mean 'dead' it just means you are indebted to certain authorities. And though that was a rumor it was a fairly solid one. Vivendi are definitely sleezy enough to do that.

This move was the smartest that could have been made with this information and this disgruntled mothef--ker isn't going to get much love from the gaming community unless they're a die-hardcore Activision and Blizzard decrier.
Kotick might be a grade A douchenozzle in some regards but this move was to the betterment of Activision and Blizzard as a whole.

I hope Activision's lawyers, 'crush this fool, and throw him into the wind', might not be a fan of Activision or Blizzard but they where in the right to buy out of what would have probably killed they in the end.

1337mokro:
This is why our financial system is in ruins. People with money are to stupid to see a good deal when it pisses them in the face. It's really sad that the higher you go up the bank-account numbers the more IQ points people seem to lose from all the cocaine and heroin snorting.

Sure it will cost Activision money... guess what you are still getting your share of the profits each year. If I was a shareholder I would want to keep the company I am part of afloat for as long as possible rather than continuing being owned by a different corporation that was literally going to sink it for a bankruptcy scam. You already were being led by the nose by Vivendi, what changes when it's an internal group of shareholders calling the shots?

Stable income or certain ruinous debt? Apparently the later is the most enticing one.

PS: After defending Activision I have to say something bad about them or else I will explode. Bobby Kotick is probably just buying Activision so he can sell it off himself, after all the man hates videogames with a fiery passion, it's just that the money is so good he can't quit. This is really nothing else but the Miller shareholder pissing his pants because a different shareholder group will now be the big dogs and call all the shots in the company rather than Vivendi.

You're absolutely correct. This is what is completely fucked up about standard corporate practice. It prioritises shareholders making a profit over any and all other gains the company might make, whether that be long term investments, research and development, new financing, stable leadership and operating conditions, ethical or sustainable practices. So despite Activision's move being a sensible one from all business angles, one angry pissant is keen to ruin it because it temporarily leaves him slightly out of pocket.

Now let me preface this by saying that I am no business guru. I could barely parse the article at all.

One thing I did get though was that the guy is not butt hurt about the buy-out. The article does not touch on his opinions on the buy-out at all. What bothers him is the side deal where just prior to the deal being announced Koticks investment group gets to buy a huge chunk of stocks at a rebate. The chunk is so big that the group becomes the biggest shareholder (not to be confused with majority shareholder).

Calling this a power grab on the part of Kotick (with a windfall to boot) is not too far off.

Also IF the lawsuit goes through, the deal is still going through. There will just be a "rule" that these sorts of insider deals would not be allowed again (it smells like insider trading at any rate).

Ultimately this will not affect Activision really. This is a fight between this guy and I suppose Kotick and his people.

thetoddo:
I have no problem with Avtivision buying out Vivendi but having the CEO able to purchase stock at a discount as part of that deal, while perhap legal, still seems shady to me.

There's nothing shady about it. It's a standard practice in most, if not all corporations.

Rellik San:
"HOW DARE THIS COMPANY WISH TO PROTECT ITS ASSESTS AND HUMAN RESOURCES BY BUYING THEMSELVES FROM UNDER A COMPANY THAT WANTS TO RUN THEM INTO THE GROUND! I'M GONNA SUE THEM FOR TRYING TO PROTECT THEIR INVESTMENTS AND IP!"

Sound business logic there.

Actually if he's right and they did an insider sale with no chance for other shareholders to buy a slice then he's got a point and it may even be illegal. If there is a conflict of interest and the shares are being sold cheap to a select few then yes the courts should investigate.

Our views of Activision, gaming or Vivendi aside, they can't shaft their shareholders.

RicoADF:

Rellik San:
"HOW DARE THIS COMPANY WISH TO PROTECT ITS ASSESTS AND HUMAN RESOURCES BY BUYING THEMSELVES FROM UNDER A COMPANY THAT WANTS TO RUN THEM INTO THE GROUND! I'M GONNA SUE THEM FOR TRYING TO PROTECT THEIR INVESTMENTS AND IP!"

Sound business logic there.

Actually if he's right and they did an insider sale with no chance for other shareholders to buy a slice then he's got a point and it may even be illegal. If there is a conflict of interest and the shares are being sold cheap to a select few then yes the courts should investigate.

Our views of Activision, gaming or Vivendi aside, they can't shaft their shareholders.

After reading this more carefully I have to reconsider what I was saying about the shareholder rules before, because this really is a bum steer for anyone who isn't Kotick.

Depending on how much I had at steak in the company. I might be pissed too. The discount could make the market value my shares lower. And the lack of a public offering to buy out or sell to other investors seems a little back handed.

Though I suspect that the investment firms will wait till a new bit of AAA titles are about to ship, then slowly unload their stock.

MinionJoe:
Nevermind doing something sensible like selling your shares in a company you disagree with. No, let's sue the company and degrade the value of those shares. Dumbass litigious motherfuckers.

Yeah, how horrible to sue over an act of bad faith. Obviously, hating one dishonest, possibly illegal act and taking action is a bad thing.

thebakedpotato:
Depending on how much I had at steak in the company. I might be pissed too. The discount could make the market value my shares lower. And the lack of a public offering to buy out or sell to other investors seems a little back handed.

Though I suspect that the investment firms will wait till a new bit of AAA titles are about to ship, then slowly unload their stock.

image

In all seriousness, this could actually turn out to be something serious, or just another asshole who thinks that filing lawsuits automatically makes him entitled to free money.

I love how many people are missing the point of this...

Plaintiff is not upset with Activision's move to buy it's independence from Vivendi; he's upset that the board of directors is allowing Kotick to use company money to buy himself all of Vivendi's shares via an internal holding in his name.

They could always use company money to buy Vivendi's stock and then dissolve that stock's value into all other existing stock; a reverse-stock split using Vivendi's shares.

Edit* I have to ask; how many people actually learned how stock works in school? Were you all absent that day or did you not read the article before waiving the war flag to save Activision from Vivendi's greed?

Rellik San:
"HOW DARE THIS COMPANY WISH TO PROTECT ITS ASSESTS AND HUMAN RESOURCES BY BUYING THEMSELVES FROM UNDER A COMPANY THAT WANTS TO RUN THEM INTO THE GROUND! I'M GONNA SUE THEM FOR TRYING TO PROTECT THEIR INVESTMENTS AND IP!"

Sound business logic there.

No the sale is the event that will run them into the ground. This article pulled the old 5B value. It's actually 8B, and is twice the amount of money Blizzard has as Cash on Hand, 4B. It will result in them taking on massive debt in ether case. Any mistake, or a failure to replace WoW, or CoD when they run dry, and they already started, will kill the company. This lawsuit is one of the few things stopping Activision from being run into the ground by Vivendi.

TL;DR
You're cheering for the villains.

If you don't like ethically questionable power grabs, you generally don't want to go too far into the stock market.

That said, Activision/Vivendi is all turning into an "everyone sucks" cluster of failure with every step.

 

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