* Ruling clears the way for closing by Tuesday deadline
* Deal key for Vivendi to streamline holdings
* Activision stock spikes nearly 5 percent
By Tom Hals
DOVER, Del., Oct 10 The Delaware Supreme Court
swept aside a lower court order on Thursday that had halted
Activision Blizzard Inc's $8.2 billion deal to buy back
its stock from Vivendi SA.
The ruling clears the way for a deal that is part of the
French conglomerate's effort to hive off assets and remake
itself into a media-focused company. The two companies said in
separate statements they expect the deal to close by Tuesday,
when Vivendi could have walked away.
Shares of Activision jumped after the Supreme Court ruling
and were up nearly 5 percent at $17.05 in afternoon trading.
They had been up about 2 percent before the ruling.
Chief Justice Myron Steele announced after an hour of
argument that the court's five justices unanimously found the
lower court had erred when it blocked the deal because
Activision shareholders were not given the chance to vote on it.
The French media and telecoms conglomerate agreed in July to
sell most of its stake in the publisher of the blockbuster "Call
of Duty" videogame series.
The deal is a key part of Vivendi's drive to streamline its
diverse portfolio of investments it built up in a frantic 1990s
spending spree. Activision argued the deal would create $1
billion of value for its shareholders.
But last month things hit a snag when an individual
Activision shareholder, Douglas Hayes, filed a lawsuit seeking a
shareholder vote on the deal.
A week later, judge Travis Laster of the lower Court of
Chancery sided with Hayes and took the rare step of halting the
transaction on Sept. 18.
The two sides sparred on Thursday over the central question
of whether the deal qualified as a merger or "business
combination" that would trigger the need for a shareholder vote
under Activision's bylaws and charter.
Michael Hanrahan, an attorney for Prickett, Jones & Elliott
in Wilmington, Delaware, who represented Hayes, argued that
Activision was buying a Vivendi shell company that owned the
stock, and therefore it was a merger.
William Savitt, a Wachtell, Lipton, Rosen & Katz attorney
who argued for Activision, urged the justices not to read the
phrase "business combination" in Activision's charter to mean
that a buyback or any large transaction needed shareholder
"It's like saying a green light and red light are the same
thing because they are both lights," he said. "There is nothing
remotely like a business combination here."
The justices agreed.
"The stock purchase agreement here contested is not a
merger, business combination or similar transaction," said
Steele. He said the court would follow at an unspecified time
with a published opinion.
Hanrahan declined to comment after the ruling.
Under the deal, Activision said it would buy back 429
million shares from Vivendi for $5.83 billion. As part of the
terms, a separate investor group led by Activision CEO Bobby
Kotick and Co-Chairman Brian Kelly will buy about 172 million
Activision shares from Vivendi for $2.34 billion. [ID:
The consortium, which will then own 24.9 percent of
Activision, includes Davis Advisors, Leonard Green & Partners,
Chinese Web portal Tencent, and investment fund