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Judge Rules Activision Executives, Including CEO Bobby Kotick, Must Face Lawsuit Over Microsoft Takeover

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A Delaware judge has ruled that Activision Blizzard executives, including longtime CEO Bobby Kotick, must face most of a shareholder lawsuit accusing them of shortchanging investors during the company’s $75.4 billion sale to Microsoft.

In an 83-page decision issued Thursday, Chancellor Kathaleen McCormick of the Delaware Chancery Court said shareholders could move forward with their “core” claim that Kotick and other board members breached their fiduciary duties by prioritizing personal and managerial interests over those of shareholders.

The case, led by the Swedish pension fund Sjunde AP-Fonden, alleges that Kotick rushed into the deal to secure his position and an estimated $400 million in change-of-control benefits, while shielding himself from potential liability related to sexual harassment scandals at Activision. Shareholders further claim that the $95-per-share price undervalued the company—particularly as Activision’s performance improved during the 21-month regulatory approval process before the merger closed in October 2023.

Judge McCormick’s ruling found sufficient grounds to infer that Kotick “manipulated the sale process to favor Microsoft,” which she described as offering “speed, deal certainty, and—inferably—a friendly landing place.” She also found it “reasonably conceivable” that Activision’s directors placed Kotick’s interests above those of investors, potentially allowing a lowball sale while the company’s reputation and stock price were still weighed down by harassment allegations.

However, McCormick dismissed claims against Microsoft, noting there was no evidence the company actively participated in the alleged breaches, even if it may have “passively stood by.” Other secondary claims against Activision officials were also dismissed.

With the decision, McCormick signaled that “litigation on the merits of a trimmed-down version of the plaintiff’s complaint can now launch,” adding pointedly: “Game on.”

The case, Sjunde AP-Fonden v. Activision Blizzard Inc. et al, continues in the Delaware Chancery Court under docket number 2022-1001, marking another chapter in the post-merger fallout surrounding one of the gaming industry’s largest acquisitions.

Take-Two Forecasts Lower 2026 Bookings as “GTA VI” Delay Dampens Outlook

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Take-Two Interactive has projected fiscal 2026 bookings of $5.9 billion to $6 billion, falling short of the revised Wall Street consensus of $6.46 billion, as the delay of its highly anticipated “Grand Theft Auto VI” (GTA VI) weighs heavily on the company’s near-term prospects.

Following the earnings announcement, Take-Two shares fell 3% in extended trading.

Key Developments:

  • GTA VI, expected to generate billions in revenue within weeks of launch, has been delayed to fiscal 2027, pushing back the expected financial windfall.

  • As a result, Take-Two recorded a $3.5 billion impairment charge in the fourth quarter, citing updated long-term expectations.

  • Despite the delay, executives said 25 new titles are planned for fiscal 2027–2028, including GTA VI.

Upcoming Releases:

The company has several other major titles planned for the current year, such as:

  • “Borderlands 4″

  • “Mafia: The Old Country”

However, analysts caution that even strong performances from these titles are unlikely to offset the financial impact of GTA VI’s absence in fiscal 2026.

“Take-Two is still poised to outperform industry growth rates,” said Wyatt Swanson, analyst at D.A. Davidson & Co, crediting the lineup of well-known IPs despite the delay.

Broader Market and Strategic Impact:

  • The delay of GTA VI has led other publishers to shift their release windows, hoping to capitalize on the absence of what would have been a market-dominating launch.

  • Take-Two, like many entertainment firms, is navigating macro pressures such as inflation and consumer spending slowdowns, which may affect discretionary purchases like video games.

GTA VI remains one of the most highly anticipated titles in gaming history, and while the delay creates short-term headwinds, its eventual release in fiscal 2027 could significantly boost Take-Two’s financial performance.

Ubisoft Shares Plunge 20% as Game Delays Increase Cash Burn

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Ubisoft shares tumbled nearly 20% on Thursday, marking the company’s biggest single-day drop in over a decade, after the French video game maker announced it would burn more cash to extend development timelines for major titles.

In an earnings statement, CEO Yves Guillemot revealed that Ubisoft is allowing “additional development time to some of our biggest productions,” which will push the release of significant content into the next two years. The move, while aimed at improving game quality, has rattled investor confidence.

Key Financial Outlook:

  • Ubisoft now expects to break even in operating profit for the fiscal year ending March 2026.

  • Net bookings for the current fiscal year (to March 2025) fell by 20.5%, due to both delayed releases and underperformance of major titles.

  • The company aims to return to positive cash flow next year, but analysts are skeptical.

Barclays analysts had projected €96 million in free cash flow this year, but said Ubisoft’s latest guidance falls “well below” expectations. “Investors will believe in the free cash flow when it is in front of them,” the bank noted.

Game Performance and Delays:

  • The much-anticipated Assassin’s Creed: Shadows has been delayed multiple times.

  • Star Wars Outlaws, another flagship title, received a lukewarm reception.

  • Morningstar analysts expressed doubt that Shadows will be enough to turn Ubisoft’s fortunes around in 2026, given the current outlook.

To manage soaring development costs, Ubisoft has launched a joint venture with China’s Tencent, targeting the production of blockbuster franchises such as Assassin’s Creed, Far Cry, and Rainbow Six.

Despite long-term hopes pinned on these franchises, the short-term outlook remains bleak. By 08:23 GMT on Thursday, Ubisoft shares were down 19.5%, putting the company on track for its sharpest decline since 2013.