Activision Blizzard shareholder suing over Microsoft sale

Shareholder Activision Blizzard has filed a lawsuit against the game’s publisher and its board of directors over alleged violations of the Securities and Exchange Act in its proposed plan to sell Microsoft. The lawsuit, filed by shareholder Kyle Watson, was filed in California on Thursday. Watson’s lawyers called Activision Blizzard’s plan to sell, outlined in recent Securities and Exchange Commission (SEC) proposal“unfair for a number of reasons,” one of which, according to lawyers, is that the board seeks to “acquire for itself and senior management significant and immediate benefits.

The lawsuit questions a potential conflict of interest, specifically that the deal is “not in the best interest” of Activision Blizzard, Watson, or the company’s shareholders and “would bring lucrative benefits to [Activision Blizzard’s] officers and directors. He also referred to “Golden Parachute” which some executives, such as CEO Bobby Kotick, would receive if he was fired. The SEC document, called 14A, includes the information needed for shareholders to vote in favor of consent.

Elsewhere in the document, Watson’s lawyers argue that Activision Blizzard’s Feb 18, filing with the SEC is “materially misleading and incomplete,” in violation of the Exchange Act. It mentions missing information in the SEC filing regarding the “special committee” that led the sale process, as well as information on “post-deal employment” and other relevant data.

Watson is seeking the court to order Activision Blizzard to release a new preliminary SEC statement that includes more facts and does not contain “false statements.” If the proposed deal goes through, Watson is seeking “damages”.

As part of the proposed deal, which was announced in January, Microsoft plans to buy Activision Blizzard at $95 a share for a total of $68.7 billion, the largest acquisition in Microsoft’s history. Activision Blizzard CEO Bobby Kotick continues to lead the company through the merger despite calls for his resignation due to his involvement in Activision Blizzard’s allegations of sexual harassment and gender discrimination.

Kotick and the company are already under SEC investigation, according to a Wall Street Journal report. The Microsoft acquisition is expected to be reviewed by the Federal Trade Commission, Bloomberg reported earlier this month. Microsoft intends to close this deal by the end of June 2023.

Activision Blizzard shareholders are also suing the company in a separate case filed in August 2021, alleging corporate executives’ negligence in reporting sexual harassment and discrimination caused the company’s stock to depreciate.

The company has also been accused of “undermining unions” in recent weeks as the company and workers testified at a National Labor Relations Board (NLRB) hearing to determine a union for QA workers.

[Disclosure: Casey Wasserman is on the board of directors for Activision Blizzard as well as the board of directors of Vox Media, Polygon’s parent company.]

Update: A spokesperson for Activision Blizzard told Polygon, “We disagree with the allegations made in this complaint and look forward to presenting our case to the court.

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