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Game developer and publisher, Activision Blizzard (ATVI - Snapshot Report) is likely to seek shareholder approval on the proposed purchase of its $8.17 billion worth of shares from Vivendi SA, its majority shareholder.

Activations’ approach indicates that it still remains committed to the buyout plan and is keen on freeing itself from the control of the parent company. The company has stated the preliminary plan in a filing with the U.S. Securities and Exchange Commission though a date is yet to be finalized.

The agreement between the two parties would be terminated within Oct. 15. On Oct. 10, Activision is set to appear before the Delaware Supreme Court to appeal against the lower-court injunction that stalled the deal.

Previously, a Delaware Court judge came out with a ruling on Sep 18, asking Activision to seek shareholder approval, apart from majority owner Vivendi, relating to the proposed sale of $2.34 billion in company stock to a group including director Brian Kelly and Bobby Kotick before the deal can be completed.

On Sep 11, Activision shareholder Douglas M. Hayes had filed a suit stating certain facts, which highlight that the proposed private stock sale would unjustifiably enrich Kelly, Kotick and other participants. In the total transaction, Kotick and Kelly, who would be contributing $50 million each, while the rest of the investor group would emerge as the biggest shareholder gathering a 25% stake of the company.

Both the parties cannot proceed with the deal further, unless the court modifies its decision and the transaction gets the approval of Activision shareholders. We believe that the court’s decision is a temporary setback for both the parties. Activision has already said that it remains committed to the deal and the completion of the deal will boost its stock price going forward.

Moreover, Activision’s strong product pipeline positions it well for growth going forward. However, stiff competition from Electronic Arts (EA - Analyst Report), Take-Two Interactive Software Inc. (TTWO - Snapshot Report) and Zynga Inc. (ZNGA - Snapshot Report) may pose some challenges.

Activision has a Zacks Rank #1 (Strong Buy).

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