Court of Chancery Affirms the Necessity of Compliance with Delaware’s Merger Statute in Faulting Defendants’ Approval Process of Microsoft Corporation’s $70 Billion Acquisition of Activision Blizzard, Inc.

February 29, 2024

The Court of Chancery holds in Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290 (Del. Ch. Feb. 29, 2024), that Prickett Jones stated clams on behalf of its client and the Class of former Activision Blizzard, Inc. (“Activision”) stockholders (the “Class”) that Microsoft Corporation’s $70 billion buyout of Activision was void, invalid and constituted conversion of the Class’s Activision shares because defendants failed to comply with Delaware’s merger statute, 8 Del. C. § 251.  Specifically, Activision’s board (i) failed to review or approve the final or complete agreement of merger in violation of 8 Del. C. § 251(b), (ii) delegated approval of a financial term of the merger to an ad hoc committee in violation of 8 Del. C. §§ 144 and 251(b) and (iii) failed to submit the complete or statutorily required agreement of merger to the Class to review and approve in violation of 8 Del. C. § 251(c).  The Court’s opinion reaffirms the importance of complying with the Delaware General Corporation Law when taking stockholders shares in a merger.

The action is captioned Sjunde AP-Fonden v. Activision Blizzard, Inc., et al., C.A. No. 2022-1001-KSJM (Del. Ch.).  Prickett Jones Directors Michael Hanrahan, Corinne Elise Amato, Kevin Davenport, Eric Juray, Stacey Greenspan and Associates Kirsten Valania and Christine Chappelear are litigating the class action on behalf of the representative institutional plaintiff Sjunde AP-Fonden.