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Microsoft's Activision-Blizzard Acquisition Deal Prevents ABK from recognizing unionization, though MS can approve

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The Lord of Cereal

The Lord of Cereal

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Jan 9, 2020
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Here's the wording from the SEC Document (pages 78-79) itself for those interested: (emphasis mine)

In addition, Activision Blizzard has also agreed that, except (1) as expressly contemplated by the merger agreement; (2) as approved by Microsoft (which approval will not be unreasonably withheld, conditioned or delayed); (3) for certain actions or omissions that may be taken in response to COVID-19 (following reasonable prior consultation with Microsoft); (4) as required by applicable law or regulations of applicable stock exchanges or regulatory organizations; or (5) as disclosed in the confidential disclosure letter to the merger agreement, during the period of time between the date of the merger agreement and the effective time of the merger (or earlier termination of the merger agreement), Activision Blizzard will not, and will cause each of its subsidiaries (with exceptions for certain specified joint venture entities and the extent of Activision Blizzard's obligations with respect thereto) not to, among other things: ...

... voluntarily recognize any labor union, works council or similar employee organization or enter into a collective bargaining agreement;
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All I have to say is just yikes... $75 billion dollar union busting from Microsoft...

Sure, MS can technically approve the unionization but it's still just gross and I'm pretty sure we all know that they probably will not allow it...

Probably explains the excessive amounts of union busting going on recently as well

Also: unrelated to the rest of the OP, I know my title is a bit wordy, if anyone has any requests to make it less wordy let me know so I can ask a mod to change the title
 
Xando

Xando

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Oct 28, 2017
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This is pretty standard during a acquisition process.

Major changes have to be approved by the acquiring party.
 

Zyae

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Of course it does, it would materially alter the acquisition.
 
J-Soul

J-Soul

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Nov 11, 2020
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Basically Activision can't take a "poison pill" before the acquisition is completed. That's how Microsoft sees it, anyways.
 
xenonium

xenonium

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Apr 3, 2020
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A perfectly normal thing that happens in any acquisition. Yet another case where Era tries to make a yikes moment out of nothing.
 
Crayon

Crayon

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Oct 26, 2017
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idk how that works during a buyout like this. Seems like it couldn't happen. Though I doubt ggms wants a union there, anyhow.
 
bsigg

bsigg

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Oct 25, 2017
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Well, yea. You're not going to allow a company you're working to acquire to make major changes to the way staffing is handled while you're going through the process of acquiring them.
 
Zebesian-X

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Dec 3, 2018
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Regardless of how you feel about this deal, Microsoft is inheriting a hell of a mess with this acquisition and they need to do right by these employees. If workers want to unionize and MS is preventing it then they need to be getting just as much heat as ACVI has up until now.

Now, it sounds like this sort of arrangement is standard when it comes to mergers and acquisitions, in which case I'll be putting this post in a time capsule and opening it back up on the day the deal closes :)
 
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TripleBee

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Not to say the Microsoft absolutely wants to prevent unionization - because they do. But this particular part of the deal is obvious - ABK can't make any large shifts to how they operate before the deal closes.
 
chrominance

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This just sounds like a standard clause to ensure the company Microsoft acquires at the end of the deal is the same company Microsoft thought they were buying at the beginning of the deal, with no major new obligations or agreements attached.

I don't have any particular illusions about Microsoft being willing or unwilling to recognize a union, but this specifically doesn't seem like evidence either way unless I'm missing something.
 
vixolus

vixolus

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I'm not gonna act like Microsoft would be union friendly anyway, but especially in this context I think the language makes sense. Like, Microsoft wouldn't want ABK to just go and hypothetically let every one of their employees unionize and then hand them off to Microsoft in 2023 as-is. Microsoft wants approval on those matters during this transitionary/approval period..

chrominance said:
This just sounds like a standard clause to ensure the company Microsoft acquires at the end of the deal is the same company Microsoft thought they were buying at the beginning of the deal, with no major new obligations or agreements attached.

I don't have any particular illusions about Microsoft being willing or unwilling to recognize a union, but this specifically doesn't seem like evidence either way unless I'm missing something.
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yeah exactly
 
Biggzy

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Oct 27, 2017
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chrominance said:
This just sounds like a standard clause to ensure the company Microsoft acquires at the end of the deal is the same company Microsoft thought they were buying at the beginning of the deal, with no major new obligations or agreements attached.

I don't have any particular illusions about Microsoft being willing or unwilling to recognize a union, but this specifically doesn't seem like evidence either way unless I'm missing something.
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I think this pretty much sums up what is going on. There is nothing really neferious going on, all but I don't have much faith that Microsoft will recognise the union anyway.
 
Rogote

Rogote

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Oct 25, 2017
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Normal for acquisitions. Yes, reality and life being shitty is often normal. Normal, yet just as shitty all the same.

But it's also so normal. I can't emphasize enough how normal it is.
 
thecaseace

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May 1, 2018
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Unlike many that will post after here I won't pretend to be a lawyer.

But it just seems to make sense to me that recognition of a union is the kind of structural change you'd prohibit a company from make is they're being acquired.

chrominance said:
This just sounds like a standard clause to ensure the company Microsoft acquires at the end of the deal is the same company Microsoft thought they were buying at the beginning...
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Pretty much this.
 
SCUMMbag

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chrominance said:
This just sounds like a standard clause to ensure the company Microsoft acquires at the end of the deal is the same company Microsoft thought they were buying at the beginning of the deal, with no major new obligations or agreements attached.

I don't have any particular illusions about Microsoft being willing or unwilling to recognize a union, but this specifically doesn't seem like evidence either way unless I'm missing something.
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Yeah. While I imagine Microsoft would rather they didn't acquire a unionised workforce, I don't think this is a moustache twirling manoeuvre from them.

With that said, I hope Raven's QA testers do get to unionise, whether that's under the leadership of Activision Blizzard or Microsoft.
 
sangreal

sangreal

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Oct 25, 2017
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of course Microsoft needs to sign off on any significant, material changes to their organization pending the close of the deal. These are boilerplate restrictions -- they expect to get what they purchased.
 
Damn Silly

Damn Silly

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Oct 25, 2017
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While I don't expect MS to recognise it anyway, I expect this particular bit of legalese is for "do not do anything that could significantly change the company from when the purchase was agreed until it is finalised", as opposed to anything explicitly union-busting, this time.
 
MetatronM

MetatronM

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Granjinha said:
oh yeah the trillion dollar company that did union busting in the past will definitely recognize the union lmao
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Whether they will or not is kind of immaterial to this particular clause, though. The fact is that with an acquisition of this size the company being bought can't do anything that would fundamentally alter the finances involved during the process. The fine print on a business deal like this is going to be a mile long and protect against every possible scenario that you can think of.

Is Microsoft then going to go ahead and recognize unionization efforts after the fact? Seems unlikely, but that's a different issue altogether.
 
Thordinson

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Brokenlynx said:
But it just seems to make sense to me that recognition of a union is the kind of structural change you'd prohibit a company from make is they're being acquired.
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This, like most of our labor laws, let's corporations decide and not the laborers. Why is an employee prohibited from making a union with their current employer simply because their soon to be employer may not want it?

Let's say the deal closes in a year, why shouldn't Activision employees not be able to make a union and have an agreement for a year with their employer?
 
Sydle

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Oct 27, 2017
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Won't happen under MS either, at least not in the US. Also not sure it's necessary in the US as the whole promise of being acquired by MS is that employee circumstances will improve.
 
Shard Shinjuku

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Zebesian-X said:
Regardless of how you feel about this deal, Microsoft is inheriting a hell of a mess with this acquisition and they need to do right by these employees. If workers want to unionize and MS is preventing it then they need to be getting just as much heat as ACVI has up until now.

Now, it sounds like this sort of arrangement is standard when it comes to mergers and acquisitions, in which case I'll be putting this post in a time capsule and opening it back up on the day the deal closes :)
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Call it the flip side of picking up ActiBlizz at a premium rate.
 
SCUMMbag

SCUMMbag

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Thordinson said:
This, like most of our labor laws, let's corporations decide and not the laborers. Why is an employee prohibited from making a union with their current employer simply because their soon to be employer may not want it?

Let's say the deal closes in a year, why shouldn't Activision employees not be able to make a union and have an agreement for a year with their employer?
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I 100% agree that there should be more rights for the workers than the corporations.

In this case, purchasing a fully unionised workforce is a completely different kettle of fish than purchasing a non-unionosed one and would effect Microsoft's valuation of the company. This clause would be put in place to stop Activision leadership from recognising any unions as they know they are out the door anyway.

One other key takeaway in this that it says that Activision cannot voluntarily recognise the union. The workers can still apply for statuary recognition which basically forces the companies hand into regonising them be it Activision, Microsoft or whoever.

I don't know enough about US labour law to say whether having a acquisition pending blocks this route but I doubt it. If it does, the system is even more fucked than I thought.
 
chrominance

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If you read the full clause in the SEC document from the OP, you can see that it's largely about maintaining the business as is, as much as possible, until the merger is complete (the section is titled "Conduct of Business Pending the Merger").

These items seem to form the principle of the clause: basically Activision Blizzard agrees to do the following:
  • subject to the restrictions and exceptions in the merger agreement, conduct its business and operations in the ordinary course of business, except with respect to certain actions or omissions that may be taken in response to COVID-19; and
  • use its reasonable best efforts to, consistent with its operations in the ordinary course of business, (1) preserve intact its material assets, properties, contracts, licenses and business organizations; (2) keep available the services of its current officers and key employees and (3) preserve its current relationships and goodwill with customers, suppliers, partners, platform providers, manufacturers and other persons with which it or its subsidiaries has business relations.
The clause goes into detail about what kinds of things the agreement would consider to violate this. Some interesting items Activision Blizzard can't do without approval from Microsoft:
  • except in consultation with Microsoft, terminate any employee at the level of senior vice president or above (other than for cause) or hire any new employee at the level of senior vice president or above;
  • enter into, adopt, amend (including accelerating vesting), modify or terminate any employee benefit plan;
  • for any current or former employee, director, officer or independent contractor of Activision Blizzard or its subsidiaries, increase compensation or benefits, pay any special bonus, remuneration or any benefit not required by any employee plan, grant any severance or termination pay, or grant any right to reimbursement, indemnification or payment of any taxes, including any taxes that may be incurred under Section 409A or 4999 of the Code, except as required by applicable law or the terms of any employee plan;
  • effect certain layoffs affecting any site of employment or employee located in the United States;
  • acquire (by merger, consolidation or acquisition of stock or assets or otherwise), or make any investments in, any interest in any assets or any other person, except for acquisitions or investments under certain thresholds;
  • enter into any new business segment that is not reasonably related to Activision Blizzard's and its subsidiaries' existing business segments on the date of the merger agreement.
The biggest thing here to me is actually the employee renumeration thing, but do I actually believe Activision isn't going to give anyone in the company a raise or bonus (or severence!) until the deal is concluded sometime in FY 2023? Not really. Imagine the talent drain if you announce to all your employees they're not getting raises next year. I assume Microsoft will simply review the renumeration changes and approve in bulk, but I'm no lawyer and don't deal with acquisitions on a regular basis so I can't make a more educated guess at what the impact of that item will be. The "no layoffs in the States" item is also interesting.
 
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