In a special meeting conducted on December 21st, 2015, MLG’s Board of Directors approved an Asset Purchase Agreement that grants Activision Blizzard a significant majority of MLG’s assets in exchange for $46 million dollars. $31 million of that sum is via a combination of cash and the assumption of “certain liabilities,” or debts the company has accrued. The remaining $15 million will be held in escrow should any claims arise from the sale. In addition, MLG CEO Sundance DiGiovanni has been replaced by former CFO Greg Chisholm, who will run the remainder of MLG’s assets in a holding company.
The meeting was held without unanimous written consent of MLG’s stockholders but is assumingly permitted under Section 228(e) of the Delaware General Corporation Law. The deal was also approved by Series A, B, B-1, B-2, and A Common Stockholders, which are a higher category of investors that include Legion Capital Investments LLC – which is managed by Mike Sepso, co-founder of MLG and current senior vice president of Activision Blizzard’s esports division. Sepso left MLG back in October 2015 for his current position in Activision. Stockholders not in these categories received a letter about the sale the following day. An excerpt can be seen below:
Neither Activision nor MLG have commented on or confirmed the sale, despite some efforts from Polygon to contact both companies as well as DiGiovanni. It is possible that this purchase agreement is a draft, but stockholders who have commented seem to have been blindsided by this deal. They speculate that the sale will mostly go towards paying off the company’s debt, leaving little for investors. As one affected stockholder, who requested to remain anonymous, stated, “I got fucked on stock.”
Major League Gaming is one of the older companies in eSports, being founded in 2002. MLG has been struggling in recent years, having acquired significant debts as of late and recently lost the Call of Duty Pro League to competing eSports company Electronic Sports League, or ESL, after eight years. If this deal is approved, this will be the second eSports league acquisition for Activision following the IGN Pro League buy-out in 2013. It is unknown how this will affect upcoming competitions, such as the Counter-Strike: Global Offensive and Halo championships, or the premium streaming service MLG.tv. Thanks to Kotaku and VG 24/7 for additional information.
I’m not the most knowledgable person when it comes to business deals and I’m not interested in the eSports scene outside of EVO. Having said that, I reported on this story because this deal stinks to high heaven once you look into the details. It appears that many shareholders are getting the rotten end of this publically unapproved deal and were taken by surprise. Furthermore, this will ultimately have a negative impact on the eSports scene, as all evidence points to MLG being shut down. More details need to be divulged but until then, this looks to hurt the business of eSports and honestly displays Activision in a negative light.
Esteban Cuevas is an Associate Editor for Middle of Nowhere Gaming and used to love to watch Championship Gaming Series on DirecTV back in the day. If you want to ask him about why Dead or Alive 4 was a stupid choice for an eSport game, check him out on Twitter @Colorwind. You can also follow his other work on his WordPress site.