New York City sues Activision Blizzard, targets CEO amid workplace scandals

The plaintiffs allege that Bobby Kotick was "unfit" to negotiate a takeover given the "broken workplace" he helped create

Activision Blizzard

New York City officials have sued Activision Blizzard over its agreement to be sold to Microsoft.

The suit, filed by New York City Employees’ Retirement System, argues that Activision CEO Bobby Kotick rushed to secure Microsoft’s takeover bid in an effort to cover up controversies at his company.

Specifically, a California lawsuit from July 2021 alleged that Activision Blizzard fostered a “frat boy culture” in which employees, particularly women, faced harassment and other forms of abuse. More controversy surfaced in November when The Wall Street Journal reported that Kotick not only knew about these incidents, but worked to cover them up, including by threatening to kill an assistant. Microsoft ultimately announced its intent to acquire Activision Blizzard two months later.

“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,” the suit says. “But it wasn’t.”

The New York plaintiffs, who own stock in Activision Blizzard, added that the deal provides “Kotick and his fellow directors [with] a means to escape liability for their egregious breaches of fiduciary duty.” Microsoft’s $95/share deal, they claim, undervalues Activision Blizzard, which was trading at close to that price prior to the California lawsuit.

As part of their suit, the New York plaintiffs are demanding access to various Activision Blizzard documents, including those pertaining to the takeover and the five other potential buyers that the company had mentioned in previous filings.

For now, though, the Microsoft takeover must go through regulatory approval in multiple countries, including the U.S. and China. Activision Blizzard shareholders have voted to approve the deal, but Wall Street remains skeptical it will go through.

It’s also unclear what will happen with Kotick himself. While he’s been expected to leave once Microsoft’s acquisition of Activision Blizzard is finalized, a recent report indicates that Microsoft hasn’t actually discussed his future. If the deal is approved, Kotick could make as much as $530 million USD (about $676.7 million CAD).

The full New York suit can be found here.

Image credit: Wikimedia Commons

Via: Axios