As reported by the Axios portal, New York City seems be suing Activision. According to the documents, Bobby Kotick was unable to negotiate the deal with Microsoft. According to Axios’ Stephen Totilo, an attempt was made to rush the deal to take him and the board out of risk of legal action over the company’s handling of misconduct.
In this case, it appears to be a serious cut to the acquisition process, which would not only prolong the deal but also has the potential to break the deal.
The lawsuit is a shareholder action in the Delaware Court of Chancery (technically a “220” lawsuit) that allows shareholders to compel companies to open their books and potentially expose wrongdoing.
New York City is demanding a long list of documents from Activision, including material related to the Microsoft deal, information about five potential buyers mentioned in the official description of Activision’s sales negotiations, board minutes, and more.
The city has been asking Activision for internal documents since last year, originally to find out what CEO Bobby Kotick knew about sexual misconduct at the company. (This misconduct has been the subject of legal proceedings).
NEWS: NYC is suing Activision, saying Bobby Kotick was unfit to negotiate the Microsoft deal–and that the deal was rushed to get him and the board out of danger of lawsuits over how they handled misconduct at the company
Details, complaint at the linkhttps://t.co/m7LVLaeaPd
— Stephen Totilo (@stephentotilo) May 4, 2022
As set out in the lawsuit, New York sought access to Activison’s books as a pretext to sue Kotick and the board members for supposed to depreciate the value of the company. It expresses frustration that Kotick, already under fire, has engaged in quick negotiations to sell the company to Microsoft in late 2021.
The process was opened on the day April 26 in Delaware by the New York City Employee Retirement System and the city’s teachers, police, and firefighters’ pension funds. This group of people own shares of Activisionaccording to the Axios report, and believes that the gaming giant’s management actions are hurting the company’s value.
He also says that the offer of $95/Microsoft Share Devalues the Companywhich was trading close to that before the Activision public scandals began last year.
Here it is likely “only” sued for damages, as this group of people is of the opinion that Bobby Kotick and Activision tried to evade payment. We know that the shareholders approved with more than 98% upvotes in the last weekso apparently we are not facing a serious risk.
A purchase of a company of this size has many investors and interests, so it is normal that the bureaucratic phase really has a long time ahead. We expect it to be completed by June 2023.
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