An Activision Blizzard shareholder filed a lawsuit against the game publisher and its board of directors alleging violations of the Securities Exchange Act in its proposed plan to sell it to Microsoft.
The lawsuit, filed by shareholder Kyle Watson, was filed in California on Thursday. Watson’s attorneys named Activision Blizzard’s plan for the sale, outlined in a recent proposal from the Securities and Exchange Commission (SEC).“Unfair for a number of reasons” – one of which, lawyers say, is that the board is trying to “procure for itself and senior management […] significant and immediate benefits.”
The lawsuit challenges potential conflicts of interest, specifically that the deal is “not in the best interests” of Activision Blizzard, Watson or the company’s shareholders and “will lucrative benefits for the [Activision Blizzard’s] Officers and directors.” It also referred to those “golden parachute” that some executives, like CEO Bobby Kotick, would receive if he were fired. The SEC filing, dubbed 14A, contains information needed before shareholders approve.
Elsewhere in the filing, Watson’s attorneys allege that Activision Blizzard’s Feb. 18 SEC filing was “materially misleading and incomplete” and violated the Securities Exchange Act. It calls for missing information in the SEC filing regarding the “ad hoc committee” that directed the sale process, as well as information on “post-transaction employment” and other relevant data.
Watson is asking the court to order Activision Blizzard to release a new SEC interim proxy statement that contains more facts and no “false statements.” If the proposed transaction goes through, Watson is demanding “voidable damages.”
As part of the proposed transaction, announced in January, Microsoft plans to buy Activision Blizzard for $95 per share for a total consideration of $68.7 billion, the largest acquisition in Microsoft history. Activision Blizzard CEO Bobby Kotick continues to lead the company through the merger, despite calls for his resignation over his involvement in Activision Blizzard’s allegations of sexual harassment and gender discrimination.
Kotick and the company are already under investigation by the SEC, according to a Wall Street Journal report. The Microsoft acquisition is also expected to be under review 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 that company directors’ negligence in their reports of sexual harassment and discrimination caused the company’s stock to plummet in value .
The company has also been accused of “union busting” in recent weeks, according to the company and workers in a National Labor Relations Board (NLRB) hearing to define a union for quality assurance 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.]
To update: An Activision Blizzard spokesperson commented to Polygon, “We do not agree with the allegations made in this complaint and look forward to presenting our arguments to the court.”
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