Does SOC Investment Group's letter put Microsoft Xbox's acquisition of Activision Blizzard in jeopardy?

Activision Blizzard shareholders have been asked not to go ahead with the Xbox deal (Image via Activision)
Activision Blizzard shareholders have been asked not to go ahead with the Xbox deal (Image via Activision)

If the deal between Microsoft and Activision Blizzard goes through, it will be the largest acquisition in the gaming sphere in terms of potential valuation. The deal is far from done as the company awaits decisions from its shareholders and directors over the takeover.

The Federal Trade Commission is also expected to announce its judgment on the potential deal. In the meantime, the SOC Investment group has written to the company's shareholders to reject the deal on two substantial grounds.

We oppose the @ATVI_AB/@Microsoft merger because it undervalues the company and future earnings by failing to address the @ATVI_AB board's poor handling of the sexual harassment crisis which has been the cause of falling share prices and operational delays. #ToneAtTheTop #CorpGov

Activision Blizzard has been embroiled in a storm in recent times over charges of s*xual misconduct. Its handling of the issue has been heavily criticized, and CEO Bobby Kotick has bore the most vitriol.

There have been criticisms over the quality of the products, but that seems relatively trivial compared to the more concerning issues. All of these points have been raised by SOC Investment group in their letter to the shareholders of the beleaguered company.

The SOC Investment Group states that Activision Blizzard is set to lose value from the Microsoft takeover

The primary question arising over the recent case is simple: Can the deal get canceled over SOC Investment Group's letter? To answer that, one needs to observe the main points and how they can develop if the takeover goes through.

SOC Investment Group has been highly critical of Activision Blizzard's handling of the accusations surrounding s*xual misconduct in its offices. The group has previously claimed the sacking of official heads, including that of CEO Bobby Kotick.

SOC Investment Group has sent a letter urging investors of Activision Blizzard to vote against Microsoft's acquisition, stating the acquisition undervalues the company and states anti-trust sentiment could cause challenges.

If Microsoft takes over Activision Blizzard, Kotick will likely be given a farewell. It probably won't be a sacking, and instead, Kotick will earn millions from the deal. However, he will likely be leaving the office with someone new in-charge.

Bobby Kotick has refused to resign over the issue of grave accusations for so long. Even if the deal gets canceled, it's unlikely that he will be fired. Hence, the deal's cancelation gives very little leverage to the shareholders and SOC as far as Kotick is concerned.

The second central point that SOC has written about is that the acquisition undermines the value of Activision Blizzard. It ignores the fact that the quality of the products has been affected by the poor work of the officials in ensuring workplace safety.


It's pretty hard to understand how Activision Blizzard could potentially lose future income if the acquisition happens. Microsoft is getting good value at per-share costs, but that's quite understandable.

If anything, rumors have hinted that there will be a fresh start once the deal gets done. SOC has written that Activision could be losing the potential of its IPs. However, recent products and their relatively shoddy state have a lot to do with gaming.

SOC has spoken about the protection of the workforce, which is entirely justified. It's pretty unlikely that the Microsoft deal will lead to a significant shakeup. If anything, Xbox allows its first-party studios to run quite independently. Given Activision's scale, it is pretty unlikely that Microsoft will meddle in day-to-day affairs.


It should be noted that SOC Investment Group's appeal today is a request to the shareholders for when they meet on April 28. Unless there's a majority consensus, the Microsoft deal won't go through.

Unless April 28 crosses, there will always be a chance that Microsoft's deal can get canceled over the SOC Investment Group's letter. However, there needs to be a judgment on the validity of the group's points. As things stand, some of the significant tenets that have been raised seem to be incongruous with what they want.

Quick Links

Edited by Sijo Samuel Paul
Be the first one to comment