A Delaware judge has ruled that former Activision Blizzard executives, including CEO Bobby Kotick, must face most of a lawsuit claiming they shortchanged shareholders during Microsoft’s $75.4 billion acquisition of the "Call of Duty" publisher. Chancellor Kathaleen McCormick of the Delaware Chancery Court said Thursday that shareholders in the proposed class action can pursue their main claim that Kotick and other Activision directors breached their fiduciary duties. However, she dismissed two claims against Microsoft.

The lawsuit, led by Swedish pension fund Sjunde AP-Fonden, alleges that Kotick rushed the merger to retain his position and $400 million in change-of-control benefits, while shielding himself from potential claims related to widespread sexual harassment at Activision. Shareholders also argued that the $95-per-share takeover price was too low and became increasingly undervalued as Activision’s performance improved during the 21-month regulatory approval process, which concluded in October 2023. Following the article’s publication, Kotick’s defamation attorneys disputed the harassment claims, stating that “not a single investigation, court finding, verdict, or ruling ever concluded that there was any merit” to the allegations.

In her 83-page decision, McCormick found sufficient allegations that Kotick manipulated the sale process to benefit Microsoft, which offered speed, deal certainty, and an “inferably friendly landing place.” She also noted it was plausible that Activision directors prioritized Kotick’s interests over those of shareholders by approving a low takeover price while harassment concerns weighed on Activision’s stock.

Claims that Microsoft aided or abetted the alleged breaches were dismissed, even if the company “passively stood by” during the process. Other claims against Activision defendants were also rejected. “Litigation on the merits of a trimmed-down version of the plaintiff's complaint can now launch,” McCormick wrote. “Game on.” A Microsoft spokesperson said the remaining claims will be disproved and insisted the acquisition was fairly negotiated, delivering significant value to Activision’s shareholders.