Game developer and publisher,
) is likely to seek shareholder approval on the proposed purchase
of its $8.17 billion worth of shares from Vivendi SA, its
Activations' approach indicates that it still remains
committed to the buyout plan and is keen on freeing itself from
the control of the parent company. The company has stated the
preliminary plan in a filing with the U.S. Securities and
Exchange Commission though a date is yet to be finalized.
The agreement between the two parties would be terminated
within Oct. 15. On Oct. 10, Activision is set to appear before
the Delaware Supreme Court to appeal against the lower-court
injunction that stalled the deal.
Previously, a Delaware Court judge came out with a ruling on
Sep 18, asking Activision to seek shareholder approval, apart
from majority owner Vivendi, relating to the proposed sale of
$2.34 billion in company stock to a group including director
Brian Kelly and Bobby Kotick before the deal can be
On Sep 11, Activision shareholder Douglas M. Hayes had filed a
suit stating certain facts, which highlight that the proposed
private stock sale would unjustifiably enrich Kelly, Kotick and
other participants. In the total transaction, Kotick and Kelly,
who would be contributing $50 million each, while the rest of the
investor group would emerge as the biggest shareholder gathering
a 25% stake of the company.
Both the parties cannot proceed with the deal further, unless
the court modifies its decision and the transaction gets the
approval of Activision shareholders. We believe that the court's
decision is a temporary setback for both the parties. Activision
has already said that it remains committed to the deal and the
completion of the deal will boost its stock price going
Moreover, Activision's strong product pipeline positions it
well for growth going forward. However, stiff competition from
Take-Two Interactive Software Inc.
) may pose some challenges.
Activision has a Zacks Rank #1 (Strong Buy).
ACTIVISION BLZD (ATVI): Free Stock Analysis
ELECTR ARTS INC (EA): Free Stock Analysis
TAKE-TWO INTER (TTWO): Free Stock Analysis
ZYNGA INC (ZNGA): Free Stock Analysis Report
To read this article on Zacks.com click here.