On November 15, 2013, the Delaware Supreme Court issued an opinion explaining its order of October 10, 2013, in which it overruled the Delaware Court of Chancery in Activision Blizzard, Inc. v. Hayes. The Supreme Court held that the Court of Chancery found ambiguity in Activision Blizzard's charter where none existed, and that the plain meaning of the charter was that no stockholder vote was needed to approve the Vivendi/Activision Blizzard transaction.

Activision Blizzard, Inc., a publicly traded Delaware corporation, was majority owned by Vivendi, S.A., the French media conglomerate. On July 25, 2013, Vivendi, Activision Blizzard and a Cayman Islands entity named ASAC II LP entered into a stock purchase agreement for the purpose of allowing Vivendi to sell down its stake in Activision Blizzard. The transactions were to be effected by:

The transaction was challenged by the plaintiff stockholder on the grounds that Section 9.1(b) of Activision Blizzard's charter mandated that the transaction be put to a stockholder vote. Section 9.1(b) read as follows:

The Delaware Court of Chancery ruled from the bench that the phrase "merger, business combination or similar transaction involving [Activision Blizzard], on the one hand, and Vivendi or its Controlled Affiliates, on the other hand" encompassed the proposed transaction. Although the transaction would result in a separation between Activision Blizzard and Vivendi, the Court of Chancery emphasized that:

For these reasons, the Court of Chancery enjoined the closing of the transaction, pending a stockholder vote or appeal to the Supreme Court. On October 10, the Supreme Court reversed the opinion of the Court of Chancery, paving the way for the deal to close the next day. The Supreme Court released its opinion for its order on November 15.

The facts of the case are summarized in greater detail in Legal Update, Delaware Court of Chancery Halts Closing of Vivendi/Activision Blizzard Deal Pending Stockholder Vote.

The Supreme Court's opinion is brief. The court emphasized a well-known axiom of contractual interpretation that the terms of a contract provision, including a charter provision, are to be given their plain meaning. A provision is ambiguous only if it is "reasonably susceptible to more than one meaning," and is not automatically ambiguous simply because litigants offer two different interpretations of the contract or charter provision. The court added that the provision must be read in context, including reading the charter and by-laws as complementary to each other if they were amended as part of the same transaction.

With that in mind, the court held that the phrase in dispute was not ambiguous in the context of the proposed transaction. Under the stock purchase agreement, Vivendi was to change from a majority to a minority stockholder in Activision Blizzard, with no further board representation and with control shifting to Activision Blizzard's public stockholders. None of Vivendi's and Activision Blizzard's businesses were to commingle or combine; the Vivendi subsidiary being acquired was only a shell entity with no operating business. The court stated that to consider the acquisition of the shell entity as tantamount to a combination between Vivendi and Activision Blizzard would be to "glorif[y] form over substance."

The court also disagreed that the charter provision was meant to capture "value moving" transactions. The court did not see why the phrase "business combination or similar transaction" should capture any transaction that involves the movement of large amounts of value, as opposed to only transactions similar to a merger in which Vivendi assumes greater control over Activision Blizzard. The court also noted that the by-laws of Activision Blizzard, which were amended at the same time as the charter, already provided for independent-director consent in the event of any related-party transaction. Consequently, the better reading of the organizational documents, taken as a whole, was that the additional layer of a stockholder vote would only be required if Vivendi were increasing its stake in Activision Blizzard.

The Supreme Court's opinion in Activision Blizzard is almost too terse and fact-specific to have wide application. The opinion does not delve deeply into the contractual-interpretation issues raised in Martin Marietta or Airgas that were brought up at the Chancery level, and instead emphasizes a simple and common-sense approach to reading the charter. In this regard, the opinion should provide comfort to transactional lawyers that they do not have to go back and rewrite similarly worded provisions to exclude "value moving" transactions.

One takeaway from the decision is the court's willingness to apply the less commonly seen rule of interpretation regarding context and complementary reading of organizational documents. The opinion shows that the court will imply the meaning of a provision from the circumstances in which it was agreed to. In particular, if the charter and by-laws were adopted or amended at the same time, the court will be willing to assume that the charter is intended to apply an additional layer of protection in narrower circumstances than those provided in the by-laws.