Activision shareholders reach US$250 million settlement over Microsoft buyout

A sign is seen outside the Activision building in Santa Monica, Calif. (AP Photo/Richard Vogel)

WILMINGTON, Delaware — Shareholders of Activision Blizzard reached a US$250 million settlement over allegations that the company’s former executives and Microsoft shortchanged them when Microsoft acquired the game maker for $75.4 billion in 2023, according to a filing made public on Friday in a Delaware state court.

Shareholders of the “Call of Duty” video game maker, led by Swedish pension fund Sjunde AP-Fonden, accused former Activision Blizzard executives including Chief Executive Bobby Kotick of breaching their fiduciary duties to investors by agreeing to a $95-per-share takeover price.

The shareholders said Kotick rushed in to the merger so he could keep his job and $400 million of change-of-control benefits. In the settlement agreement, the pension fund said there was compelling information that undermined any claim that Kotick and the Activision Blizzard defendants failed to act in good faith.

Microsoft and Kotick brought counterclaims against Sjunde, which will also be resolved in the settlement agreement.

Both sides denied the allegations against them, according to the court filing.

The defendants said they were settling to avoid the distraction of litigation and Sjunde said it was settling because the payment was fair.

The settlement must be approved by Kathaleen McCormick, the chief judge of the Delaware Court of Chancery who is overseeing the litigation.

The settlement will be funded 40 per cent by Microsoft, while the remainder will be paid by directors and officers’ liability insurance, according to a court filing. The payment amounts to around 30 cents for each Activision Blizzard share.

The deal was the largest in the video game industry when it was unveiled in 2022 and gave Microsoft the heft to compete with Sony Group 6758.T .

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and Matthew Lewis)