SOC Investment Group urges Activision shareholders to vote against Xbox deal

SOC Investment Group has urged fellow Activision Blizzard shareholders to vote against Microsoft’s proposed merger with its Call of Duty publisher.

It was announced in January that Microsoft intends to buy Activision Blizzard in a $68.7 billion deal — the largest in the gaming industry ever — that will also give the Xbox maker exclusive ownership of franchises including Warcraft, Overwatch, Crash Bandicoot and Guitar Hero.

Activision Blizzard investors are scheduled to vote for or against the proposed acquisition at a special shareholder meeting on April 28. The transaction cannot proceed unless the proposal for adoption of the merger agreement is approved by the affirmative vote of the majority of Activision Blizzard stock.

Call of Duty Vanguard & Warzone Season 2 Gameplay Reloaded

SOC Investment Group has been highly critical of Activision Blizzard’s response to recent sexual harassment and discrimination lawsuits, and last November called for the resignations of senior figures including CEO Bobby Kotik, Chairman Brian Kelly and Chief Independent Director Robert Morgado.

On Thursday, she wrote a letter to her fellow shareholders urging them to reject the proposed merger for two reasons.

“This transaction failed to properly assess Activision and its future earnings potential, in part because it ignores the role that the sexual harassment crisis—and incompetent handling of the Activision board—has played in delaying product launches and lowering the share price,” the SoC argued.

It also said that “it is doubtful that any deal with Microsoft (or a similar acquirer) would be viable, given the shift in the antitrust enforcement environment, as well as the obvious sources of potential competition damage arising from the merger.”

Microsoft said it hopes to complete the transaction in the first half of 2023, subject to closing conditions and completion of regulatory review. The US Federal Trade Commission is dealing with an antitrust review to determine whether the acquisition would give Xbox an unfair competitive advantage.

Four US senators recently wrote to the Federal Trade Commission to express concern about the proposed merger, which they said has already hampered union efforts and “threatens worker-led demands for accountability” over allegations of sexual misconduct and discrimination.

In its letter Thursday, the SOC said: “We do not believe that Activision shareholders should look to a deal to rebuild the value lost due to Activision’s management’s failure to ensure safety and fairness in the workplace and because of the Board’s failure to respond constructively to the growing crisis.”

“But we also note that since at least last July, Activision employees have bravely demanded that harassment and retaliation are at the end of the company and that they have a critical role in reshaping the company’s culture going forward.

“We believe that only by constructive engagement with its workforce – the one asset that Activision cannot sell but which the company cannot operate without – can the company begin a real transformation and restore investor confidence in its reputation and operations.

“We urge you to join us in rejecting the proposal to merge Microsoft and elect a new, competent and dedicated Board of Directors at the upcoming Activision Blizzard Annual Meeting.”

The California Department of Employment and Housing (DFEH) sued Activision Blizzard in July 2021 for failing to address sexual harassment and discrimination against female employees.

It was revealed Wednesday that two of the attorneys who were leading the previously high-profile lawsuit are no longer in the case following accusations of meddling by California Governor Gavin Newsom.

In March, a federal court judge approved an Activision Blizzard settlement of $18 million in a similar sexual harassment case brought last year by the United States Equal Employment Opportunity Commission.