Microsoft Corp. is entitled to a quick court declaration on whether its $68.7 billion acquisition of Activision Blizzard Inc. in October was valid, and a pension fund shareholder that challenged the deal has a right to be involved in the process, Delaware's Court of Chancery said Tuesday
In a telephonic bench ruling following oral arguments, Chancellor Kathaleen St. J. McCormick granted a motion from Microsoft and Activision to expedite their application for relief under Section 205 of the Delaware General Corporation Law, as well as a motion from shareholder Sjunde AP-Fonden to intervene in the case.
"Congratulations, you are both winners today," the chancellor said.
Microsoft and Activision filed the Section 205 application on May 2, seeking an official court declaration that the merger, which officially closed on Oct. 12, 2023, is valid under Delaware law. Section 205 gives Delaware corporations the power to retroactively correct legal errors or technical mistakes by getting an order from the Court of Chancery.
The companies' application came in response to a ruling the court issued in February that raised questions about whether the merger had fully conformed to Delaware law.
That ruling allowed Sjunde AP-Fonden's proposed class action, which challenged the validity of the merger, to move ahead.
Stephen P. Blake of Simpson Thatcher & Bartlett LLP, an attorney for Microsoft and Activision, urged the court not to let a "straightforward" and "routine" 205 application "devolve into an unnecessary adversary proceeding."
Microsoft is simply seeking a court declaration that it owns Activision, Blake said, adding: "We just want to get our merger validated."
Chancellor McCormick found that since "everyone agrees" the Section 205 application came in response to the other lawsuit and that "practically speaking," it operates as a counterclaim, the shareholder has a right to intervene. She said she would hear the case sometime in the fall.
In the meantime, she said, "it might be good for you all to take a breath" and "see if there's peace that might be achieved on this."
