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Cypress Associates LLC successfully assisted its clients, the shareholders of Activision Blizzard Inc. (“Activision”), secure a record $275 million settlement. This represents the largest settlement of shareholder derivative lawsuit in Delaware to date. Activision is the leading global video game publisher and best known for franchises such as World of Warcraft and Call of Duty.
The lawsuit by Activision shareholder Anthony Pacchia was prompted by the $8 billion transaction in 2013 in which Activision and a separate investor group (“ASAC”) led by Activision’s CEO and Board Chairman bought Activision stock from Vivendi, a French media-focused conglomerate, at a below-market price. As part of the Delaware Chancery Court lawsuit settlement, two unaffiliated directors will also be added to the Activision board and ASAC’s voting rights will be reduced from 24.9% to 19.9%.
Cypress offered expert witness testimony on behalf of shareholders as to the disputed transaction and the damages suffered as result of not pursuing feasible alternatives in which Activision – rather than the CEO, Board Chairmen and their investor group – would have repurchased the Vivendi shares. Notwithstanding the fact that the transaction created significant stock price appreciation, Cypress demonstrated that realistic alternative transactions available to Activision that would have created even more value for shareholders.