Activision Blizzard shareholders have reached a $250 million settlement over allegations that former executives and Microsoft shortchanged investors during the company's acquisition. According to a filing made public on Friday in a Delaware state court, the settlement was reached between shareholders led by Swedish pension fund Sjunde AP-Fonden and the defendants. The agreement resolves claims that former executives, including Chief Executive Bobby Kotick, breached fiduciary duties by agreeing to a $95-per-share takeover price. As reported by AP, the lawsuit was filed in 2022 by Swedish pension fund Sjunde AP-Fonden (AP7), which claimed Kotick rushed the sale to Microsoft to avoid fallout from workplace misconduct allegations surrounding the publisher.
The settlement will be funded 40% by Microsoft while the remainder will be paid by directors and officers' liability insurance, as reported by Reuters. The payment amounts to approximately 30 cents for each Activision Blizzard share. Shareholders who owned Activision Blizzard stock between the merger announcement and the October 2023 closing of the deal would receive about 30 cents per share. Both sides denied the allegations against them, with defendants stating they were settling to avoid litigation distraction and Sjunde settling because the payment was fair. Microsoft stated it entered the settlement "solely to avoid the burden, expense, and distraction of continued litigation."
Shareholders accused Kotick of rushing into the merger to keep his job and $400 million of change-of-control benefits. According to the court filing, the pension fund stated there was compelling information that undermined any claim that Kotick and Activision Blizzard defendants failed to act in good faith. The case became increasingly connected to allegations raised in California's 2021 lawsuit against Activision Blizzard over discrimination and workplace harassment claims, which was settled in December 2023 for approximately $54 million. In the latest settlement filing, AP7 acknowledged its original claims were based partly on media reports and allegations from the California Civil Rights Department that had never been validated by a court or independent investigation. The filing also cited language from the California consent decree stating no court or investigation substantiated claims of "systemic or widespread sexual harassment" at Activision Blizzard.
The acquisition officially closed in October 2023 after lengthy regulatory reviews in multiple markets, including scrutiny from the U.K.'s Competition and Markets Authority. The U.S. Federal Trade Commission sued to block the merger, but a federal judge ruled in Microsoft's favor, while the U.K.'s Competition and Markets Authority initially blocked it before approving a restructured deal. Microsoft ultimately sold Activision Blizzard's cloud streaming rights outside the European Economic Area to Ubisoft to secure regulatory approval. The settlement must be approved by Kathaleen McCormick, the chief judge of the Delaware Court of Chancery who is overseeing the litigation. As reported by Reuters, the deal was the largest in the video game industry when it was unveiled in 2022 and gave Microsoft the competitive heft to compete with Sony Group.
