Another one

New NYC lawsuit spices up Microsoft's Activision acquisition

The suit alleges CEO Bobby Kotick rushed the Microsoft buyout to save himself.

SUN VALLEY, ID - JULY 08:  Robert Kotick. CEO of Activision Blizzard, attends the Allen & Company Su...
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A newly publicized New York City lawsuit sets its sights directly on Activision Blizzard CEO Bobby Kotick and, more specifically, on the allegedly devious reasons he accepted Microsoft’s $68.7 billion buyout offer earlier this year. The lawsuit claims Kotick rushed to complete the takeover in order to squirm his way out of any liability for misconduct at Activision.

The lawsuit, a copy of which was provided to Axios this week, was not submitted by the kind of watchdogs that have been suing Activision for other misdeeds. This one originated with the New York City Employees’ Retirement System and pension funds for teachers, police, and firefighters, groups that own stock in Activision.

The crux of the lawsuit is that, while staring down large-scale allegations of sexual harassment and workplace misconduct and his company, Kotick decided the best course of action would be to rush a deal with Microsoft. The lawsuit says that Kotick should have been viewed as unfit to negotiate the sale, seeing as the CEO has himself been accused of knowing about the company’s sexual assault allegations and doing nothing in response.

Digging in — The NYC groups suing Activision have actually been working to secure important company documents since October 2021. The suit says Activision provided some of these documents but left plenty more missing. Many of the requested documents pertain to Kotick’s alleged prior knowledge of sexual misconduct at Activision.

The plaintiff is also looking for the down-and-dirty on Activision’s Microsoft deal, including information about other potential buyers and other internal documents. The suit alleges that the $95 per share offered by Microsoft undervalues the company.

Stacks and stacks of suits — The timing of Microsoft’s acquisition is undeniably strange, whether by coincidence or planning. Microsoft really thought the right time to pay $68.7 billion for Activision was after the gaming company had been served a laundry list of workplace misconduct allegations for six months straight?

The possibility that Kotick closed on the Microsoft deal to slip out of Activision unnoticed is understandably concerning to investors. How much he turned a blind eye to the company’s long-standing culture of misconduct is still unclear; the company’s Board of Directors said simply that Kotick “appropriately addressed workplace issues brought to his attention.”

Activision Blizzard still faces a minefield of other lawsuits, too, including a few related to the Microsoft acquisition, two from shareholders, and an official SEC investigation. If Kotick does manage to slip out the door unscathed, it’ll only be by the skin of his teeth.

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