The closing of the biggest merger in the history of the video games industry continues to generate additional costs. Microsoft and former Activision Blizzard executives have agreed to pay $250 million to end shareholder litigation. The settlement, revealed in Delaware state court, ends a battle over whether investors were harmed in the $75.4 billion 2023 deal.
Allegations of haste and private interests
The lawsuit, led by Swedish pension fund Sjunde AP-Fonden, struck directly at the decision-making process surrounding the acquisition. The shareholders accused Activision’s former management, headed by long-time CEO Bobby Kotick, of breach of fiduciary duty. According to them, the price of $95 per share was too low. They also claimed that Kotick sought to complete the deal quickly to secure his own position and a gigantic $400 million severance package.
Both Microsoft and Kotick countered these allegations from the beginning, even filing counterclaims against the Swedish fund. In the end, both sides decided to compromise. The defendants explain the decision by wanting to avoid a long and distracting trial, while the plaintiffs considered the negotiated amount to be fair.
Who will fund the settlement?
The payment structure shows that the financial burden has been shared between the corporation and individuals. Microsoft will cover 40% of the negotiated amount. The remaining 60% will be put up by the former directors and the company’s D&O insurers. On a per Activision Blizzard share basis, the settlement gives investors around 30 cents in compensation.
Formal approval from Kathaleen McCormick, chief judge of the Delaware Court of Chancery – the same judge who in the past oversaw, among other things, the high-profile dispute surrounding Elon Musk’s acquisition of the Twitter platform – is still required for the agreement to take effect.
For Microsoft, the expense is only a fraction of the amount of money that went into the market clash with Sony Group. While $250 million is one of the largest settlements of its kind in the history of the digital entertainment sector, for the Redmond giant it simply represents the final operating cost of sealing a new power play in the gaming segment.
