Activision Blizzard, Inc.
STOCKHOLDER’S HISTORIC CHALLENGE TO $75 BILLION MICROSOFT-ACTIVISION MERGER
On behalf of plaintiff Sjunde AP-Fonden (“AP-7” or “Plaintiff”) and a putative class of former Activision stockholders, Kessler Topaz secured back-to-back rulings largely denying defendants’ motions to dismiss AP-7’s claims challenging the $75.4 billion merger (the “Merger”) between Microsoft Corporation and Activision Blizzard, Inc., the company behind popular video games Call of Duty and World of Warcraft.
AP-7 originally pursued this litigation in response to allegations of sexual harassment against Activision’s CEO Robert Kotick. AP-7 sought to hold Activision’s board of directors (“Board”) and management accountable for a widespread toxic corporate culture that negatively impacted the company and its stockholders.
As the scandal deepened, Activision’s competitors perceived that Activision was wounded and its shares were trading for less than their fair value. Kotick also knew that a sale of the company would potentially insulate him from further scrutiny and legal claims. Activision’s stock, which had traded over $100 per share in February 2021, dropped to the low $60s by the second half of November and stood at $65.39 on January 14, 2022, the last trading day before the Board approved a draft merger agreement on January 17, 2022. On January 18, 2022, Kotick and Microsoft executed a different version of the merger agreement (the “Merger Agreement”), pursuant to which Microsoft would buy Activision for $95 per share.
After conducting an investigation of Activision’s books and records pursuant to Section 220 of the Delaware General Corporation Law (“DGCL”), AP-7 filed claims alleging that the Merger undervalued Activision’s shares and was engineered to protect Kotick and management rather than to maximize stockholder value. AP-7 also brought statutory claims alleging that the Merger failed to comply with multiple provisions of the DGCL. For example, Plaintiff alleged that the Activision Board did not properly approve the Merger under Section 251 of the DGCL because material terms of the deal had not been finalized at the time the Board approved it. Plaintiff also alleged that the Board improperly delegated to a committee the decision of whether Activision stockholders would receive dividends while the Merger was pending. That committee had then agreed with Microsoft that it would only pay one $0.47/share dividend during the Merger’s pendency. Plaintiff further alleged that as a result of these statutory violations, Microsoft unlawfully “converted” Activision stockholders’ shares when it completed the Merger.
As expected, the Merger drew regulatory and antitrust scrutiny, and thus took a long time to complete. By July 18, 2023, the Merger Agreement’s outside termination date, the Merger still had not received antitrust clearance. Kotick negotiated and the Board approved the July 18, 2023 Letter Agreement, which extended the Merger Agreement, and also allowed Activision to pay a 2023 dividend of $0.99/share, totaling more than $700 million.
On June 5, 2023, the defendants moved to dismiss Plaintiff’s statutory and conversion claims. On October 13, 2023, the defendants consummated the Merger.
On February 29, 2024, Chancellor Kathaleen St. J. McCormick issued two opinions that largely denied defendants’ motions to dismiss AP-7’s statutory and conversion claims. Chancellor McCormick ruled that AP-7 had adequately pled that: (i) the Merger was invalid under Section 251 of the DGCL; (ii) the Board improperly delegated to a committee the negotiation and approval of the dividend provision of the Merger Agreement; and (iii) Microsoft had unlawfully converted Activision stockholders’ shares when it closed the Merger. Chancellor McCormick determined that boards of directors “must strictly comply with statutory requirements governing mergers,” and that “requiring a board to approve an essentially complete version of a merger agreement” merely reflects “the basic exercise of fiduciary duties, not to mention good corporate hygiene.”
Following the Chancellor’s decision, Microsoft and Activision sought judicial validation of the Merger and Merger Agreement, pursuant to Section 205 of the DGCL (“Section 205”), to retroactively cure certain statutory defects alleged by AP-7. On July 9, 2024, the Chancellor entered a Section 205 validation order on the same terms that Plaintiff negotiated with Activision and Microsoft, which prevented the validation from impairing certain of Plaintiff’s claims in this action.
On June 12, 2024, Plaintiff filed its Third Amended Complaint (the “TAC”), which spanned 320 pages and included allegations that: (i) defendants violated multiple provisions of the DGCL in connection with the negotiation, approval, and disclosure of the Merger and the Merger Agreement; (ii) defendants closed a statutorily invalid Merger, and did so by filing a false merger certificate with the Delaware Secretary of State, both of which constituted conversion of the Activision stockholders’ shares (the “Conversion Claims”); (iii) the director defendants breached their fiduciary duties to Plaintiff and the Class in their negotiation, approval, and disclosure of the Merger and the Merger Agreement, and in their negotiation and approval of the Letter Agreement; (iv) the director defendants committed knowing violations of law and intentional misconduct by failing to approve a statutorily compliant Merger Agreement, continuing the Merger through the Letter Agreement rather than addressing statutory defects, and closing an invalid Merger; (v) Activision’s payment of the $0.99 dividend in 2023 on shares of common stock held by Amber Holding Subsidiary Co., an Activision subsidiary, violated Delaware law and constituted breaches of fiduciary duty by the director defendants; and (vi) Microsoft aided and abetted the director defendants’ alleged breaches of fiduciary duty in connection with the Merger and the Letter Agreement.
Thereafter, on August 14, 2024, defendants moved to dismiss the TAC, and the parties engaged in a second round of motion to dismiss briefing and oral argument. On October 2, 2025, the Chancellor issued an 82-page memorandum opinion largely denying defendants’ motions to dismiss the TAC. The Chancellor denied defendants’ motions to dismiss: (i) Plaintiff’s Dividend Claim (Count I), Conversion by Merger Claim in part (Count II), and Conversion by False Merger Certificate Claim (Count II); (ii) Plaintiff’s claims against the director defendants for alleged breaches of fiduciary duty in connection with the negotiation, approval, and disclosure of the Merger and the Merger Agreement (Count III), and the negotiation and approval of the Letter Agreement (Count IV); and (iii) Plaintiff’s claim that the vote on the Merger Agreement at the special meeting allegedly failed to comply with Section 251 (Count I). The Chancellor also converted defendants’ motions to dismiss the Treasury Dividend Claims (Counts VII and VIII) into motions for partial summary judgment, permitting Plaintiff to obtain discovery on those claims. The Chancellor only dismissed Plaintiff’s claims against: (i) defendants for alleged violations of the appraisal statute, 8 Del. C. § 262 (Count I.D); (ii) defendants for alleged conversion based on the execution of the Merger Agreement (Count II.B); (iii) director defendants for alleged knowing violations of law and intentional misconduct (Counts III.B and IV.B); and (iv) Microsoft for alleged aiding and abetting (Counts V and VI). The Chancellor concluded: “Litigation on the merits of a trimmed-down version of the plaintiff’s complaint can now launch. Game On.”
In May 2026, Microsoft agreed to a $250 million settlement with former stockholder of Activision to resolve this matter (the “Settlement”). The Settlement is still subject to final approval by the Court of Chancery of the State of Delaware (the “Court”). On June 8, 2026, the Court preliminarily approved the Settlement and scheduled a Settlement Hearing for September 15, 2026 at 11:00 a.m. in the Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware 19801.
If you are a Class Member, you may be eligible to receive a pro rata distribution from the Settlement proceeds. Eligible Class Members include record holders and beneficial owners of Activision common stock who owned such stock (or any interest therein) at any time from January 18, 2022 through October 13, 2023. Eligible Class Members do not need to submit a claim form in order to receive a distribution from the Settlement, if approved by the Court. If you are eligible for a distribution from the Settlement, it will be paid to you directly.
To learn more about the Settlement, including whether you qualify as a Class Member, please contact the claims administrator, A.B. Data, Ltd., at 877-390-3469 or [email protected]. You can also visit the Settlement website at: https://activisionblizzardstockholderlitigation.com/.
KTMC’s case team includes Lee Rudy, Eric Zagar, and Lauren Lummus.
Read February 29, 2024 Memorandum Opinion Here
Read February 29, 2024 Letter Decision Here
Read October 2, 2025 Memorandum Opinion Here
Read June 12, 2024 Third Amended Class Action Complaint [Public Version] Here