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As New York City officials group sue Activision Blizzard, what will be its likely implication on the Xbox deal?

A fresh lawsuit has been filed against Call of Duty makers as the Xbox deal proceeds (Images via Activision, Microsoft)
A fresh lawsuit has been filed against Call of Duty makers as the Xbox deal proceeds (Images via Activision, Microsoft)

There has been a fresh twist in Xbox's potential takeover deal of Activision Blizzard as a lawsuit has been filed against the company and CEO Bobby Kotick. The latest charges have been brought on by the New York City Employees' Retirement System and pension funds for the city's teachers, police, and firefighters.

The group is an active owner of shares in the company and has brought some serious charges against the company. The bigger question will be whether the deal between Microsoft's gaming division and Activision Blizzard could now be in danger.

This is just the latest of several lawsuits that have been filed against the US-based company. Bobby Kotick and his team's handling of charges of gender-based differences and misbehavior in the office are the main bone of contention.

The affair has reached such a point that many have called for Kotick's dismissal in the past. To make matters worse, the situation now gets more and more complicated for Microsoft and Xbox.

NEWS: NYC is suing Activision, saying Bobby Kotick was unfit to negotiate the Microsoft deal--and that the deal was rushed to get him and the board out of danger of lawsuits over how they handled misconduct at the companyDetails, complaint at the linkaxios.com/new-york-city-…

The Xbox and Activision Blizzard deal gets a fresh twist with a lawsuit filed against the latter

As reported by Axios, a fresh lawsuit has been filed against Bobby Kotick and Activision Blizzard board over wrongdoings involving the Xbox deal. The report has accused the wrongdoers of seeking an easy way out by accepting the agreement.

Additionally, there has also been a charge that the valuation hasn't been met as Xbox's price is lower than the actual price.

Incidentally, the current share prices of Activision Blizzard are lower than the price at which the deal will go through. However, much of the depreciation in share values has been over the issue's mishandling.


Could this mean trouble for Xbox?

From the looks of it, the simple answer will be no. When one analyzes the details of the charges, it's pretty clear who is being targeted.

"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, but it wasn't."
@LB3PTMAN @stephentotilo @Nibellion the suit doesn't mean they stop the merger, it means it's suing for damages they believe kotick and AB attempted to escape from paying it would be more about blocking (or recouping ) his (and the board's) giant payday parachute

The accusations are clearly against the board and Kotick in this regard. The lawsuit also adds that the Xbox deal has been done in a rush so it could allow Kotick and the company to escape the liabilities.

"Kotick and his fellow directors a means to escape liability for their egregious breaches of fiduciary duty."

Neither of the charges is against Xbox or the price they're planning to acquire the company. If anything, fingers are being raised at Kotick on two grounds.

The first ground is about the directors trying to buy an escape route. The second ground claims the price at which the deal is being done is an undersell on Activision Blizzard's part.

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The accusations come fresh after the company declared that they're against the publication of a report. They feel that directly combatting the issues on hand rather than making a public report will waste time and resources.

It should also be noted that the complainant is part of the same shareholders' group which sanctioned the deal at the end of April. It was passed with an overwhelming majority as 98% of the shareholders favored the acquisition.

Xbox University PSA:Activision Blizzard shareholders approve Microsoft acquisition! "More than 98% of the shares voted at the Special Meeting were voted in favor of the proposed transaction with Microsoft." https://t.co/mLCSA2tIIZ

So it seems highly unlikely that Microsoft will have much to worry about from tonight's developments. However, it still has work on its hands as the regulatory authorities are yet to approve the deal, and it could go into 2023 before a contract is finalized.

Activision Blizzard and Bobby Kotick make the situation even grimmer, and one will have to wait to find out what awaits him and the board in the future.

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Edited by Yasho Amonkar
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