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Activision investor lawsuit overview:
- Who: Plaintiff Sjunde Ap-Fondren filed a lawsuit against Activision Blizzard.
- Why: The video game company allegedly arranged an ill-timed merger with Microsoft to protect the CEO’s reputation, causing investors to lose money.
- Where: The Activision investor lawsuit was filed in the Delaware Court of Chancery.
An Activision Blizzard investor filed a lawsuit over the video game company’s merger with Microsoft, Law360 reports.
Plaintiff Sjunde Ap-Fonden alleges the Activision merger with Microsoft, which was announced in January, was hastily arranged to protect CEO Robert Kotick in the wake of harassment and discrimination scandals.
If Microsoft’s proposed $68.7 billion buyout moves forward, Microsoft would reportedly become the world’s third-largest gaming company by revenue.
“Seeing that Activision and its CEO were weak and wounded, Microsoft – with whom Kotick had developed and maintained a close relationship over the past 20 years – used its commercial leverage to buy Activision at a bargain price,” the Activision investor lawsuit alleges.
Several sexual harassment lawsuits have reportedly been filed against Activision over allegations the company fostered a toxic culture and that Kotick knew about the sexual harassment cases at the company.
The parents of a former employee filed a lawsuit alleging their daughter died by suicide because of the harassment she received from male Activision employees. Another employee alleges a manager groped her and also threatened to release sensitive photos.
Activision merger allowed Kotick to preserve reputation and walk away with $400M, lawsuit alleges
Many called for Kotick to lose his job, but the Activision investor lawsuit alleges that the CEO could have lost millions of dollars if he had been fired for cause. The Activision merger with Microsoft allegedly provides a way for Kotick to preserve his reputation and take home $400 million.
Activision’s stock is valued at $95 per share, according to the merger agreement. However, if the Activision merger goes through, dividends will be suspended for 12 to 18 months, costing investors up to $2.35 per share in dividends, Ap-Fonden claims.
“The merger is an ill-timed, poor deal for the Activision stockholders,” the Activision investor lawsuit says.
“The merger was hastily negotiated after Activision’s stock price had dropped by over 30% in the previous few months based on disclosures concerning the harassment scandal, related investigations and suits by regulators, federal securities and derivative actions by stockholders, and employee departures and protests,” the lawsuit states.
In related Activision news, earlier this year, a consumer hit Activision with a class action lawsuit alleging the card packs in its Hearthstone game deceive, mislead and harm players.
Do you think the Activision merger is a bad deal for shareholders? Tell us your thoughts in the comments!
The plaintiff is represented by Prickett Jones & Elliott PA.
The Activision investor lawsuit is Sjunde Ap-Fonden v. Activision Blizzard, et al., Case No. 2022-1001, in the Delaware Court of Chancery.
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