Activision Blizzard sued by New York employees pension fund

Activision Blizzard has been sued in Delaware by the New York City Employees Retirement System over allegations that Bobby Kotick was “unfit to negotiate a sale of the company” and negatively impacted stock value .

Microsoft announced its intention to acquire Activision Blizzard in January this year. This deal was approved by a shareholder vote last week. Unfortunately, the company’s legal issues continue and another lawsuit has been filed regarding the acquisition agreement.

Another Activision Blizzard lawsuit seeks to block Microsoft acquisition

Axios reports (via Reddit) that Activision Blizzard has been sued by the New York Employee Retirement System and pension funds representing New York City teachers, police, and firefighters. All of these groups own Activision stock. The lawsuit alleges that the actions of management (including Bobby Kotick) negatively impacted the value of the shares they own.

The heart of the complaint is detailed in the court documents.

[…]

19. Given Kotick’s personal liability and responsibility for Activision’s broken workplace, it should have been clear to the board that he was unfit to negotiate the sale of the company. But that was not the case. According to the proxy, the board chose Kotick to lead the negotiations on Activision’s behalf, while the board itself apparently took a hands-off approach. Microsoft opened acquisition talks on Nov. 19, 2021, but the board didn’t hold a meeting to discuss Microsoft’s outreach until two weeks later, on Dec. 1, 2021.

20. In this window, without Board clearance or an actual offer from Microsoft, Kotick blithely informed Microsoft that it would be willing to accept an offer in the range of $90 to $105 per share. Microsoft then duly made an offer at the low end of Kotick’s arbitrary $90 range on December 10, 2021. On December 16, 2021, despite several other unnamed interested parties in the Proxy, Activision and Microsoft had already executed a 30- day confidentiality agreement.

21. The speed with which Kotick moved not just to set a bid cap, but to execute a deal, was predictable. Not only did the merger offer Kotick and his fellow directors a way to escape liability for their flagrant breaches of fiduciary duty, it also offered Kotick the opportunity to realize substantial non-tariffable benefits. As detailed in the later 220 request, these included significant bonuses that Kotick could receive for simply ensuring that Activision complied with the law.

[…]

A major problem (but not the only one) is that the quick negotiations and perceived low price of Microsoft’s proposed acquisition may not have made shareholders as much money as they could have. The lawsuit requests additional documents to investigate these claims, attorneys’ fees and any other payments the court may deem necessary.

It is important to mention that this lawsuit is not specifically aimed at financial compensation for the alleged low price of the acquisition. This is likely because the claimants do not have the necessary documentation to assess this claim. Further lawsuits could follow if the court allows the plaintiffs to investigate the documentation requested by this new lawsuit from Activision Blizzard.

Dolores W. Simon