* Delaware court orders a temporary halt
* Deal was supposed to have closed this month
* Wall Street unfazed by court ruling
* Court ruled in response to shareholder lawsuit
By Malathi Nayak and Leila Abboud
SAN FRANCISCO/PARIS, Sept 19 A U.S. court has
taken the rare step of halting Vivendi SA's $8.2
billion deal to sell most of its stake in Activision Blizzard
Inc back to the U.S. videogame publisher, but the move
is unlikely to kill the transaction, according to analysts and
The Delaware Chancery court decision put a temporary hold on
the deal's closing, after Activision investor Douglas Hayes
filed a lawsuit arguing the companies breached their legal duty
by failing to submit the deal to a shareholder vote.
The surprise ruling, which emerged after Wednesday's market
close, delays a deal regarded as pivotal for Vivendi as it
streamlines a diverse portfolio built up in a frantic 1990s
Vivendi said in July it had agreed to sell most of its stake
in the publisher of the blockbuster "Call of Duty" videogame
franchise for $8.2 billion, paving the way for a broader split
of the French conglomerate's media and telecoms assets.
"It is exceedingly rare for a court to enjoin a corporate
transaction or shareholder vote - not never, but seldom," said
Boris Feldman, a lawyer at Wilson, Sonsini, Goodrich & Rosati.
Feldman's firm is not involved in the case.
Activision and Vivendi could now appeal the preliminary
court decision, and if they prevailed the deal could close
relatively quickly. Feldman said the Delaware courts are
"extremely fast," and that the Delaware Supreme Court could be
expected to rule "in a matter of weeks, not months."
Another option would be for Activision to arrange a
shareholder vote, which would take longer, analysts said.
Both sides had aimed to finalize the transaction by the end
of this month.
Wall Street was relatively unfazed by the court ruling, with
Activision's shares down 0.6 percent at $17.06 on the Nasdaq on
Thursday afternoon. Activision shares were still well above the
$13.60 level at which Vivendi intends to sell its Activision
stock back to the company, meaning that buyers would obtain
stock at a steep discount.
"We expect that the parties could explore a dual track
approach of appealing the decision, which if successful, would
likely result in a faster resolution than a vote, and seeking a
non-Vivendi shareholder vote," UBS analyst Eric Sheridan wrote
in a research note.
"We expect shareholders would approve the transaction in
such a scenario given the deal's accretion for shareholders."
'CONSIDERING ALL OPTIONS'
Under the deal, Activision said it would buy back 429
million shares from Vivendi for $5.83 billion. As part of the
terms, an investor group led by Activision CEO Bobby Kotick and
Co-Chairman Brian Kelly will separately purchase about 172
million Activision shares from Vivendi for $2.34 billion.
The consortium, which will own 24.9 percent of Activision,
includes Davis Advisors, Leonard Green & Partners, Chinese Web
portal Tencent, and investment fund Fidelity Investments.
The shareholder, Hayes, who has sued Activision, Vivendi and
the investor group, claimed that the deal should not be
completed as it was not subject to a majority vote of
Activision's stockholders excluding majority owner Vivendi and
The court granted a temporary injunction on the closure of
the deal, unless its order is modified on appeal or the
transaction is approved by a vote by Activision's shareholders.
Vivendi shares closed 0.4 percent lower at 17.38 euros in
Paris trading, while the French blue-chip index rose
about 1 percent.
"Vivendi and Activision Blizzard remain committed to a swift
conclusion of the transaction and are considering all options
with their lawyers in light of the Court's order," the companies
said in a statement.