Ever since Microsoft (MSFT) announced its intent to acquire video game publisher Activision Blizzard (ATVI) in January 2022 for $68.7 billion, it seemed as if the latter could get an intervention it was in desperate need of.
Thanks to a slate of sexual harassment allegations that were filed against Activision Blizzard last year, resulting in an in-depth Wall Street Journal story that claims Chief Executive Officer Bobby Kotick knew about sexual harassment within the company and did nothing to stop it, the company's reputation has taken a nose dive.
The issues have also elicited employee strikes, labor shortages, and difficulty attracting new talent.
Activision Blizzard's sales have also taken a hit. It reported weaker than expected earnings in its April 25 earnings call, with group adjusted revenues falling 28.5% to $1.48 billion. Analysts had estimated the company would report earnings of $1.8 billion.
In order to actually acquire Activision Blizzard, however, Microsoft has a few hurdles to vault over first, and one was discussing it with its shareholders. Several of them tried to sue the company in February in regards to the potential buyout, calling it "unfair" and accusing the company of violating the Exchange Act.
But now the formal vote has taken place, and a large majority voted for the same outcome.
What Did Activision Blizzard Shareholders Vote For?
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While there was some public resistance to Microsoft's intent to acquire Activision Blizzard at first, holding a vote revealed that Activision Blizzard investors are very much for the idea.
More than 98% of special shares voted in favor of the acquisition, according to a press release Activision Blizzard released on April 28.
“Today’s overwhelmingly supportive vote by our stockholders confirms our shared belief that, combined with Microsoft, we will be even better positioned to create great value for our players, even greater opportunities for our employees, and to continue our focus on becoming an inspiring example of a welcoming, respectful, and inclusive workplace,” Kotick said.
Activision Blizzard will report the results and file to the U.S. Securities and Exchange Commission next week.
What Happens Next?
The next stage the deal will face is an antitrust review by the Federal Trade Commission, which will determine if the buyout would put Microsoft in a position where it would have an unfair competitive advantage.
It will also have to go through FTC Chair Lina Khan, who is known for her position on more stringent reviews of tech companies' proposed acquisitions.
The original deal as proposed by Microsoft was to buy Activision Blizzard at $95 a share. However, the company's current stock price is much lower after its recent earnings call. Bloomberg reports that this could mean investors don't believe the deal will actually go through.
President Biden's current position on antitrust enforcement could also have an effect on the buyout as well, as there have already been many accusations towards Activision Blizzard's allegedly unlawful business practices.
The gaming company did have a big recent win, however. Another lawsuit against Activision Blizzard was recently dismissed by U.S. District court judge Percy Anderson. Anderson said the suit, which was filed by a group of investors, suffered "a lack of particularity." The investors have until May 21 to file the suit a second time if they so wish.
The Microsoft deal is scheduled to go through in June of 2023.
