An Activision Blizzard shareholder has filed a lawsuit against the game’s publisher and its board of directors of the alleged Securities Exchange Act violations in its proposed plan for sell it to Microsoft.
The lawsuit, filed by shareholder Kyle Watson, was filed in California on Thursday. Watson’s attorneys called Activision Blizzard’s plan for the sale, outlined in a recent proposal by the Securities and Exchange Commission (SEC)“Unfair for a number of reasons” — one of which, the lawyer said, is that the board is looking to “shop for itself and senior management.” […] significant and immediate benefits. ”
The lawsuit raises questions about potential conflicts of interest, specifically that the agreement is “not in the best interest” for Activision Blizzard, Watson, as well as the company’s shareholders, and that “would create lucrative interests for the company.” [Activision Blizzard’s] officers and directors. “It also refers to “golden umbrella” that some executives, like CEO Bobby Kotick, would get if he was fired. The SEC filing, known as 14A, includes information needed before shareholders vote yes.
Elsewhere in the filing, Watson’s attorneys allege that Activision Blizzard’s February 18 filing with the SEC was “seriously misleading and incomplete,” in violation of the Exchange Act. . It pointed to information missing from the SEC filing regarding the “special committee” that ran the sales process, as well as information on “post-trade employment” and other related data.
Watson is seeking a court order to order Activision Blizzard to issue a new SEC preliminary proxy statement that includes more facts and is free of “false statements.” If the proposed trade is taken, Watson will look for “claims of damages”.
As part of the proposed transaction, announced in January, Microsoft is expected to acquire Activision Blizzard for $95 per share, at a total cost of $68.7 billion, the largest acquisition in Microsoft’s history. Activision Blizzard CEO Bobby Kotick continues to lead the company through the merger, though called for his resignation about his involvement in Activision Blizzard’s allegations of sexual harassment and gender discrimination.
Kotick and company were investigated with the SEC, as reported by the Wall Street Journal. The Microsoft acquisition is also expected to be reviewed by the Federal Trade Commission, Bloomberg reported earlier this month. Microsoft intends to close the deal by the end of June 2023.
Activision Blizzard shareholders are also suing the company, in a separate lawsuit filed in August 2021, alleging that company leaders’ negligence in reports of sexual harassment and discrimination causing the company’s stock to depreciate.
The company has also accused of “undermining the union” in recent weeksas companies and workers testify in a hearing by the National Labor Relations Board (NLRB) to determine a union for QA workers.
Update: A spokesperson for Activision Blizzard made the following comment to Polygon: “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”
Update (February 25): A second shareholder lawsuit has been filed against Activision Blizzard and its board of directors, this time in a New York court. Plaintiff, Shiva Stein, is bringing similar complaints to the court: Specifically, Activision Blizzard’s proxy revelations are not good enough.
A note about Stein, however, is that she is arguably one of the most “prolific” securities plaintiffs in the United States – second only to the Securities and Exchange Commission, according to Reuters. Legal data firm Lex Machina reported in 2021 that Stein filed 124 securities lawsuits between 2018 and 2020. Half of the lawsuits she filed in 2021 were dismissed voluntarily, Reuters reported. know. Stein’s attorney told Reuters it was because “the defendant companies made adjusted disclosures to more fully inform public shareholders.”
Update (March 8): Since the initial two filings in February, four more stock owners have filed separate lawsuits alleging Activision Blizzard violated the Securities and Exchange Act. Activision Blizzard is currently facing six lawsuits over the matter – three in New York, one in Pennsylvania and two in California.
Reached for comment, a spokesperson for Activision Blizzard pointed to Polygon with the company’s original statement. “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court,” the spokesperson wrote.
[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.]