Two lawsuits have been filed to stop the sale of Activision‘s sale to Microsoft.
A new report from The Hollywood Reporter states shareholders have filed lawsuits against the sale, alleging the deal will benefit Activision insiders to the detriment of ordinary investors. The two lawsuits were filed on Thursday in California and New York federal court, with both questioning whether the company’s board of directors have a conflict of interest in securing approval of the deal because of “Activision’s disclosures to the Securities and Exchange Commission detailing the transaction.”
The suit states that the process by the Individual Defendants was “flawed” and “inadequate.” It goes on to suggest the process was conducted with the interest of the Individual Defendants with the hopes of “effectuating a sale of the Company by any means possible.”
In a statement released to the press, Activision said it was looking forward to presenting its case in court. “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”
The shareholders also allege in the lawsuits that Activision insiders have a conflict of interest. This is because its said that Activision negotiated large portions of company stock, options and other equity — this is, of course, an issue as they become viable upon a deal’s approval. In the lawsuit, the shareholders also call out the “golden parachute packages” for the senior management. It’s said that those packages entitle Bobby Kotick to a $14.6 million payout, as well as $25.4 million to chief financial officer Armin Zerza and $29.1 million to chief operating officer Daniel Alegre should they be terminated “under certain circumstances.”
As it stands, it’s very normal for these types of lawsuits to occur during a major merger such as this one. The lawsuits will temporarily halt the deal and require Activision to reveal more details about the transaction. Should the acquisition move forward, it would make Microsoft the leader in cloud-based gaming services.