There are two issues on Activision-Blizzard (NASDAQ:ATVI) stock investors’ minds ahead of it’s potential buyout by Microsoft (NASDAQ:MSFT) scheduled to close next year. The core issues affecting Activision-Blizzard today are claims against the company regarding sexual harassment in the work place and accusations of insider trading. However, ATVI investors should not worry too much about these issues. Ultimately, the negative claims against ATVI are unlikely to materially affect the deal itself. This makes ATVI stock a bargain because it still trades at a discount to Microsoft’s (NASDAQ:MSFT) valuation.
How These Issues Impact ATVI Stock
First, let’s discuss the accusations of unsafe work environments. A group of leading Democrats is pushing the Federal Trade Commission to look further into the Microsoft-Activision deal. Those Senators addressed a letter to FTC chairwoman Lina Khan in which they argue the deal undermines efforts to improve working conditions. As mentioned earlier, Activision has been under the microscope following years of claims over sexual harassment and unfair labor practices. All of these claims were known prior to Microsoft agreeing to purchase Activision.
The other news traders should be aware of relates to allegations of insider trading. Activision CEO Bobby Kotick met with Alexander von Furstenberg during the week before von Furstenberg, Barry Diller and David Geffen bought $40 options on ATVI stock on Jan. 14. That options trade was placed days before Activision was acquired by Microsoft at $95 per share.
Although the optics of the transaction don’t appear positive, the parties are denying any wrongdoing. The important thing to understand here is that even if insider trading is discovered to have occurred, ATVI is still valued at $95 by Microsoft. And insider trading likely leads to penalties for the involved parties, but it shouldn’t impact the deal itself.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.