New York City sue Activision Blizzard, demand to see company records
They claim Bobby Kotick was "unfit" to negotiate the deal with Microsoft
Some Activision Blizzard shareholders want to rake through the company’s records to investigate whether CEO Bobby Kotick pushed through the takeover by Microsoft to prevent himself being found liable for alleged misconduct, according to a recently filed complaint. The ‘220 complaint’ – a legal recourse for shareholders to seek access to company books and records – was filed in Delaware by New York City Employees’ Retirement System and pension funds for teachers, police and firefighters on April 26th. It’s since been shared with Axios.
The groups hold shares in Activision Blizzard and are claiming the company's board of directors affected the company’s value in their handling of the sale to Microsoft. Last week, an overwhelming majority of shareholders voted to approve Microsoft’s $68.7 billion (£50 billion) offer to purchase Activision Blizzard. Still, it now looks like not everyone involved is happy with that price. The shareholder groups have been seeking access to Activision Blizzard’s records since the autumn – prior to the deal with Microsoft – to investigate whether Kotick was aware of misconduct at the company.
The New York shareholders now want to use the records to sue Kotick and other board members for allegedly undervaluing Activision Blizzard. The company was trading close to Microsoft’s offer of $95 (£76) per share before their woes began to see light in summer last year, which would make the deal just a 1.16% premium on the value of shares. However, the shareholders claim Activision Blizzard's stated 45.3% premium from when the deal emerged is due to the effect of the board's misconduct on share prices. They also find Kotick’s prominence in conducting the deal with Microsoft galling, saying: “Given Kotick’s personal responsibility and liability for Activision’s broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company.”
Microsoft’s purchase of Activision Blizzard was announced rather suddenly back in January. Bobby Kotick has stayed in place despite multiple walkouts by staff calling for his resignation. Staff across Activision Blizzard will report to Microsoft Gaming’s CEO Phil Spencer instead of Kotick when the deal is completed. Spencer seemed to touch on the matter when the deal was made public, saying:
“We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We're looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard."
The furore surrounding Activision Blizzard following the Wall Street Journal’s report into allegations of misconduct and harassment at the company doesn’t look like it’s dying down. Most recently, Activision Blizzard’s board of directors have recommended that shareholders vote against a proposal to investigate any efforts at the company to tackle harassment and misconduct at their annual meeting in June.
