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Barry Diller rejects insider trading on Microsoft, Activision agreement

Kara Swisher, CNBC’s Andrew Ross Sorkin, Martha Stewart and Barry Diller at CNBC’s “The Next 25” Gala in New York.

CNBC | Nbcuniversal | Getty Images

Diller, who confirmed to the Journal that he had been contacted by regulators, said in a statement to CNBC: “None of us had any knowledge of any person or source or anything about a potential acquisition of Activision by Microsoft.”

“We were simply acting on the belief that Activision was undervalued and therefore had the potential to become private or to be acquired,” Diller said.

“And if we had such information, we would never have acted on it – it is credible to think that we would have done it three days before Microsoft and Activision announced their announcement.”

Diller had told the Journal: “It was simply a lucky bid.”

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The trio has an “unrealized profit of about $ 60 million on options trading, based on the recent Activision stock price of about $ 80,” according to people familiar with the trades, the Journal reported.

The newspaper said the Justice Department is conducting a criminal investigation into whether the options trade was in violation of insider trading laws, while the SEC is conducting a civil investigation into the same issue.

The SEC and the Department of Justice declined to comment to CNBC.

Geffen and von Furstenberg, the son of Diller’s wife, legendary fashion designer Diane von Furstenberg, did not immediately respond to requests for comment.

Microsoft declined to comment, and Activision did not immediately respond to a request for comment.

Diller is a member of the board of Coca-Cola.

Last week, Activision Blizzard CEO Bobby Kotick said he would not run for re-election as CEO of Coke, saying he wanted to pay attention to the Microsoft deal.

Other investors besides Diller, Geffen and von Furstenberg may have seen an opportunity in the midst of the turmoil at Activision Blizzard before the deal was announced.

The company’s stock, which traded at close to $ 100 per share in June last year, had fallen to nearly $ 57 per share in early December.

The move began after California regulators filed a gender-discriminatory lawsuit against the company in July and accelerated in November, after the company announced game delays, and after the Journal reported that Kotick had known for years about sexual assault and mistreatment of female workers. . despite his claims to the contrary.

At the time of the stock price declines, there was significant speculation that the company would agree to be sold or that another CEO would be elected to replace Kotick.

By the end of December, Warren Buffett’s company, Berkshire Hathaway, had bought Activision shares for nearly $ 1 billion.

Buffett sent a letter last month stating that the purchase of the shares was made by an investment manager who operates independently of him at an average price of $ 77 per share. share in previous months. Buffett also wrote that Berkshire “had no prior knowledge” of the deal with Microsoft.

Additional reporting of Steve Kovach

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