NYC funds lawsuit against Activision CEO for rushing Microsoft deal to escape scandals - New Style Motorsport

  • The New York-based pension funds alleged that Activision’s CEO and board of directors rushed to close a merger deal with Microsoft.
  • In a new lawsuit, they claim they did so because they wanted to avoid liability for workplace scandals.
  • The groups claimed that the rushed deal undervalued Activision and harmed shareholder interests.

Santa Monica-based video game company Activision Blizzard is facing a new lawsuit from shareholders who say the company fast-tracked its $69 billion merger with Microsoft earlier this year to avoid responding to allegations that they made the deal. turn a blind eye to workplace bullying.

The Employees Retirement System of the City of New York, along with other city fire, police and teacher pension funds, which invest in Activision, filed a complaint with the Delaware Court of Chancery on 26 April alleging that Activision CEO Bobby Kotick and his board of directors urged Microsoft to quickly close the deal, resulting in the “Call of Duty” publisher being undervalued.

Axios was the first to report the complaint.

Through the lawsuit, the New York-based groups are trying to force Activision to share records that could prove whether Kotick and the board committed any wrongdoing while negotiating the merger deal.

“Because Activision will become a wholly owned subsidiary of Microsoft after the Merger, the Merger will have the effect of extinguishing these high-value derivative claims against the Activision Board, and specifically Activision CEO Robert Kotick. “said the pension funds in the complaint.

“We disagree with the allegations made in this complaint and look forward to presenting our arguments in court,” an Activision spokesperson told Insider.

Claims of workplace harassment and discrimination at Activision surfaced last July with a lawsuit from the state of California.

In July, the state of California sued the video game company, alleging equal pay violations, sex discrimination and sexual harassment.

The Wall Street Journal followed up with a report in November detailing that Kotick had known about these allegations for years, though a spokesperson told the outlet that the CEO would not have been aware of all the complaints.

Just days after the Journal article, Microsoft began discussing a possible merger with Activision, the complaint says.

The plaintiffs alleged that Kotick was motivated to close the merger quickly to avoid taking responsibility for misconduct at his company.

It was also driven by the monetary reward, they claim. The suit alleges that Kotick would receive a bonus of up to $22 million just for making “appropriate progress” toward specific gender-related goals at Activision through the merger.

This meant that Kotick and the board had “conflicts of interest” in negotiating the merger, according to the complaint.

Microsoft offered in January to buy Activision for $95 a share. Activision, at the time, claimed that it was a 45% premium to its stock price at the time.

The New York-based plaintiffs disputed Activision’s claim, saying the figure did not take into account the negative impact of scandals involving the company.

“The price of this deal represents an insignificant 1.16% premium over Activision’s 30-day average share price” prior to the date California sued Activision, according to the complaint.

“Given Kotick’s personal responsibility for Activision’s broken workplace, it should have been clear to the Board that he was not in a position to negotiate the sale of the Company,” the complaint says. “But it was not like that”.

Leave a Reply

Your email address will not be published. Required fields are marked *