The latest regulatory filings released by the U.S. Securities and Exchange Commission (SEC) showed that Bobby Kotick, the chief executive of game publisher Activision Blizzard, was exposed to concealing the company’s sexual assault. After the scandal sent its share price tumbling, Microsoft began approaching it about an acquisition.
The two companies began talks in November 2021, and two months later reached a deal worth $68.7 billion in what could be the largest acquisition ever by a U.S. tech company, documents show. For Microsoft, the timing of its choice to acquire Activision Blizzard is obviously very delicate.
On November 16 last year, the Wall Street Journal reported that multiple women had accused Kotick of abusing them. Meanwhile, while Kotick has long been aware of allegations of wrongdoing within the company, he has not shared all relevant information with the board.
Activision Blizzard’s shares fell 11% in the days following the report. That’s when Microsoft approached Activision Blizzard, SEC filings show.
In the video, Kotick told employees that the WSJ report contained “inaccurate and misleading views of our company, myself, and my leadership.” Before that, a California agency had sued Activision Blizzard, saying it had a sexist culture.
According to the documents, Bloomberg reported on Nov. 18 that its gaming chief Phil Spencer spoke internally about sexual harassment as a result of the acquisition agreement between Microsoft and Activision Blizzard. Speaking at the “Another Topic Conference” on the 19th, Spencer told Kotick that Microsoft wanted to discuss strategic opportunities between the two companies.
On Nov. 20, Microsoft CEO Satya Nadella told Kotick in a phone call that he wanted to explore the possibility of acquiring Activision Blizzard.
Originally, Microsoft was considering a bid of $80 a share, a Nov. 26 message from Spencer to Kotick and Activision Blizzard chairman Brian Kelly. The offer represents a nearly 32% premium to the previous day’s closing price.
As negotiations continued, the two sides eventually agreed on a price of $95 per share. Microsoft announced the details of the deal on January 18 this year. Shares of Activision Blizzard closed at $81.05 a share on Friday.
Before announcing the acquisition by Microsoft, Kotick approached several other companies, regulatory filings said. Kelly also received emails from people who were not named in the filing, expressing interest in acquiring a stake in Activision Blizzard, or participating in a deal to acquire some or all of Activision Blizzard.
Microsoft expects to close the deal by the fiscal year ending June 30, 2023, which could help Microsoft add subscribers to Game Pass. Game Pass is Microsoft’s service offering hundreds of games on Xbox consoles and PCs.