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Activision Blizzard is being sued for fast-tracking Xbox acquisition

The head of Activision Blizzard is the focus of a new lawsuit that argues he should never have been in charge of the acquisition by Microsoft.

Yet another lawsuit has been filed against Activision Blizzard, but this time it’s focused specifically at controversial CEO Bobby Kotick, who the New York City Employees’ Retirement System claims is using the Microsoft acquisition to escape liability for existing accusations of harassment and discrimination at the company.

A report last year from The Wall Street Journal alleged that Kotick knew about many of the incidents for years and purposefully chose not to tell Activision Blizzard’s board of directors about them. Apart from outrage from within and without the industry this also caused the company’s stock value to plummet, a percentage of which is owned by New York City’s pension fund for teachers, police, and firefighters.

The new lawsuit is demanding access to documentation that Activision Blizzard has so far refused to release, and which should show exactly what Kotick and the board of directors knew and when.

The lawsuit states that Kotick had a ‘strong likelihood of liability for breaches of fiduciary duty, together with other members of the board’ and that ‘it should have been clear to the board that he was unfit to negotiate a sale of the company.’

Acquisition talks started almost immediately after The Wall Street Journal report was published, with Microsoft’s Phil Spencer entering negotiations only a day after publicly rebuking the company.

The lawsuit calls Kotick’s actions ‘inexcusable’, especially as he ‘stands to personally receive substantial material benefits whose value is not directly aligned with the merger price’ – with current estimates suggesting he’s personally in line to make $22 million from the acquisition.

‘Not only did the Merger offer Kotick and his fellow directors a means to escape liability for their egregious breaches of fiduciary duty, but it also offered Kotick the chance to realise substantial nonratable benefits,’ reads the lawsuit, as noted by Axios.

Not only that, but the lawsuit claims that the deal Kotick made greatly undervalues the company, something which other investors have also complained about.

Despite discontent amongst a small minority, the vast majority of investors have already voted in favour of the deal and the only thing preventing it now is monopoly investigations by the U.S. government.

Many in Wall Street seem to think that this will in fact block the deal, although that still seems unlikely given that the acquisition would still only make Microsoft the third biggest games company in the world.

Whether this new lawsuit will influence the investigations is currently unclear.

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