*

Shareholders say Activision CEO prioritized own interests

*

Microsoft ( MSFT ) wins dismissal of aiding-and-abetting claims

*

$75.4 billion takeover closed on October 2023

(Updates with comment from Kotick's counsel in paragraphs 5-6,

comment from Microsoft ( MSFT ) in paragraph 11)

By Jonathan Stempel

Oct 3 (Reuters) - A Delaware judge said former

Activision Blizzard officials including Chief Executive Bobby

Kotick must face most of a lawsuit alleging they shortchanged

shareholders when Microsoft ( MSFT ) bought the "Call of Duty"

game maker for $75.4 billion.

Chancellor Kathaleen McCormick of the Delaware Chancery

Court said on Thursday the shareholders in the proposed class

action can pursue their "core" claim that Kotick and other

Activision directors breached their fiduciary duties. She

dismissed two claims against Microsoft ( MSFT ).

Shareholders led by Swedish pension fund Sjunde AP-Fonden

accused Kotick of rushing into the merger so he could keep his

job and $400 million of change-of-control benefits, and insulate

himself from claims he knew about widespread sexual harassment

at Activision.

They also said the $95 per share takeover price was too low

from the outset, and looked worse as Activision's performance

improved during the 21-month regulatory approval process for the

merger, which closed in October 2023.

In an October 7 letter sent after publication of this

article, Kotick's defamation counsel disputed claims of

widespread harassment at Activision.

"Not a single investigation, court finding, verdict, or

ruling ever concluded that there was any merit" to the

allegations of widespread harassment at Activision, Tom Clare

and Nick Brechbill of Clare Locke wrote.

In an 83-page decision, McCormick found sufficient

allegations that Kotick manipulated the sale process to favor

Microsoft ( MSFT ), which "offered speed, deal certainty, and--inferably

a friendly landing place."

She also found it reasonably conceivable that Activision

directors put Kotick's interests ahead of those of shareholders,

including by allowing a lowball takeover price while harassment

concerns were depressing Activision's stock.

She dismissed claims that Microsoft ( MSFT ) aided and abetted the

alleged breaches, even if the Redmond, Washington-based company

may have "passively stood by" while they occurred. She also

dismissed other claims against the Activision defendants.

"Litigation on the merits of a trimmed-down version of the

plaintiff's complaint can now launch," McCormick wrote. "Game

on."

A Microsoft ( MSFT ) spokesperson said that the company believes

the remaining claims will be disproved. "This acquisition was

fairly negotiated and delivered great value to Activision's

shareholders," the spokesperson added.

The shareholders' lawyers did not respond to requests for

comment.

The case is Sjunde AP-Fonden v Activision Blizzard Inc et

al, Delaware Chancery Court, No. 2022-1001.