Top execs of Call of Duty-maker Activision 'cheated' shareholders during Microsoft acquisition, rules judge; adds: But Microsoft ...

A Delaware judge has ruled that the top executives at including the former CEO must face a alleging that they charted investors during the company’s $75.4 billion acquisition by Microsoft. However, the court has dismissed the claims that Microsoft aided in the alleged misconduct. Chancellor Kathaleen McCormick of the Delaware Chancery Court in an 83-page decision said that the shareholders can pursue their ‘core’ claim that Kotick and other directors breached their iduciary duties by prioritizing personal interests over shareholder value.

Allegations of self-interest and lowball pricing

The lawsuit filed by a Swedish pension fund Sjunde AP-Fonden accused Kotick od rushing into the merger in order to secure his position and $400 million in change-of-control benefits, while shielding himself from fallout over sexual harassment allegations at Activision. The shareholders argued that the $95 per share deal undervalued the company, mainly as Activision’s performance improved during the 21-month regulatory approval process before the merger closed in October 2023.

McCormick found it “reasonably conceivable” that Kotick manipulated the sale process to favor Microsoft, which offered “speed, deal certainty, and—inferably—a friendly landing place.”

Microsoft cleared, but not entirely unscathed

The judge has however dismissed claims that Microsoft aided and abetted alleged breaches, but noticed that the tech giant may have “passively stood by” as they occurred. All the other claims against Activision defendants were also dismissed.

“Litigation on the merits of a trimmed-down version of the plaintiff’s complaint can now launch,” McCormick wrote. “Game on.”