New York City Suing Activision Blizzard Over Allegedly Rushed Microsoft Deal by Bobby Kotick to Escape Liability
Activision Blizzard has been sued by a group based in New York City over an alleged rushed arrangement of a deal with Microsoft by CEO Bobby Kotick. The suit claims this lets him avoid liability and hurt the company’s value.
According to a report by Axios’ Stephen Totilo, the suit was filed by a group of stockholders made up of the New York City Employees’ Retirement System and pension funds. These groups hold investment in the company and have filed a type of suit that may compel a company to reveal financial information and even open their books. If successful, New York would gain access to the books, documentation of the Microsoft deal and negotiations, info on other potential buyers, and possibly, internal documents on Kotick’s knowledge of the various allegations and complaints made against the company for discrimination, harassment, and hostile workplaces.
Allegations that Kotick was “unfit to negotiate a sale of the Company”, according to the filing, “should have been clear to the Board” based on the series of investigations, lawsuits, and misconduct allegations stemming from harassment and discrimination. Activision Blizzard’s filings show that the company is still facing things like a federal harassment suit with the EEOC (which it has settled, but there’s a potential appeal coming) , California’s big lawsuit via the state’s Department of Fair Housing and Employment (DFEH), which tried to stop the EEOC settlement, two open shareholder lawsuits, four lawsuits over the Microsoft deal, a potential class-action lawsuit, and investigations into the deal by the SEC and Department of Justice. The Microsoft acquisition still faces a number of regulatory steps and hurdles in several regions, and some are wondering if it will even pass them.
It’s a hefty load of legal and investigative action, so this forms the basis of this new filing, which accuses Kotick of rushing to complete a deal that, despite working out to almost $69 billion (at $95 a share), undervalues the company. This is based on the stock price having dropped from around that price since allegations and lawsuits were made public last year. This filing focuses in on Kotick’s actions because the group claims that the rush to a deal at a price that’s potentially too low, costing the company value, to escape liability for the misconduct that happened under his leadership and wash his hands of it.