Delaware Approves $250 Million Settlement for Microsoft and Activision
A Delaware court has granted final approval to a $250 million settlement in a shareholder class-action lawsuit over the Microsoft-Activision Blizzard deal.
Chief Judge Kathaleen St. Jude McCormick of the Delaware Court of Chancery granted final approval to a $250 million settlement, ending a shareholder class-action lawsuit over Microsoft's acquisition of Activision Blizzard.
The court rejected objections from merger arbitrage funds, which challenged the settlement through securities claims in federal court, with the judge considering these objections narrow in scope but potentially impactful.
Under the settlement, Microsoft will cover 40% of the amount while insurers will cover 60%, equivalent to about 30 cents per share of Activision Blizzard stock.
Shareholders had challenged the deal terms and related disclosures, and a GuruFocus report notes that the settlement approval removes a major legal burden for Microsoft and may contribute to stabilizing investor sentiment amid ongoing scrutiny of large tech deals.
What do these terms mean?
Delaware Court of Chancery: A court specialized in corporate disputes, which many US corporate contracts designate for jurisdiction.
Class-action lawsuit: A lawsuit brought by representatives on behalf of a large group of affected parties, where each member receives compensation from a settlement or judgment.
Arbitrage funds: Funds that invest in the shares of target companies in mergers, waiting for the deal to close to profit from the price spread.
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