The largest of Sweden’s national pension funds, AP7, is taking Activision and Microsoft to court over a planned merger for which it said the bid and terms were not done properly and shareholders – including AP7 – lost money as a result.

AP7 said in a statement today that in a US court case it had sued US gaming firm Activision, its board of directors, and Microsoft in connection with Microsoft’s proposed acquisition of Activision.

“The background is that the process surrounding the acquisition, as well as the bid and terms, has not been done correctly and has disadvantaged Activision’s shareholders, which includes AP7 and our savers,” said the fund, which runs the default option in Sweden’s first-pillar premium pension system.

AP7 said: “In 2021, Activision and its CEO were embroiled in a sexual harassment case that led to investigations by US authorities and several private lawsuits.”

This had a negative effect on the share price of Activision, the SEK855bn (€79.5bn) pension fund said.

Employees, investors and the public advocated that Bobby Kotick, the chief executive officer of Activision – a firm known for games such as Call of Duty and Crash Bandicoot – should resign, AP7 said.

“Instead, the CEO negotiated the merger with Microsoft, which included a provision that allowed him to continue as CEO while the merger was pending review by US and international regulators,” according to the pension fund.

Other board members, who also faced potential liability from the harassment case, had supported the merger, AP7 said.

“It resulted in Activision being undervalued at the time of the merger and unfairly protecting the CEO and the other board members at the expense of Activision’s shareholders,” said AP7.

Asked for comment, a spokesperson for Microsoft told IPE: “Our proposed acquisition of Activision Blizzard was negotiated lawfully and fairly.”

IPE has also contacted Activision for a response to AP7’s statement.

In an article by Bloomberg Law two weeks ago, Activision spokesman Joe Christinat was quoted as saying the deal was great for shareholders.

“We garnered 98% approval of votes cast,” Christinat said in the article, adding: ”The board went through a thorough process to decide the right move for employees, shareholders, and players.”

The case is a class action suit filed in Delaware’s Chancery Court, according to Bloomberg Law.

AP7 said it expected a judgement or settlement to compensate Activision shareholders for the harm they had suffered “as a result of the flawed merger process and the unfairly low bid price”.

The pension fund said legal processes were one of its ownership tools to protect the interests of its savers.

“AP7 takes advantage of the opportunity to pursue legal processes through class actions against companies that have treated shareholders incorrectly and negatively affected the share price,” it said.

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