Analyst: ASAC’s Purchase of Vivendi Property Will Not Harm Activision Shareholders
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
After the market close on Wednesday, Activision Blizzard (NASDAQ:ATVI) announced that the Delaware Chancery Court issued a preliminary injunction blocking the closing of the previously announced transactions between Vivendi, Activision Blizzard and ASAC II LP, unless the injunction is modified on appeal or the transaction is approved by a stockholder vote of the non-Vivendi Activision shareholders. On September 11, a shareholder of Activision Blizzard filed a class action lawsuit, Hayes v. Activision Blizzard, Inc., for failing to submit the transactions for stockholder approval. The complaint claims that Vivendi and the Activision Board of Directors breached their fiduciary duties by allowing for the private transaction with ASAC, unjustly enriching Activision’s CEO, Co-Chairman and other investors involved in the private sale.
Activision Blizzard stated that it remains committed to the share buyback from parent Vivendi and the new capital structure. Under the proposed transaction, Activision will borrow $4.75 billion, use $4.6 billion of the borrowed amount (net of fees and upfront interest) and $1.2 billion of domestic cash on hand to repurchase roughly 429 million shares from Vivendi for approximately $5.83 billion in cash at a price of $13.60/share.