Microsoft will inherit Activision's explosive sexual harassment lawsuit when its $68 billion deal closes, experts say

• By taking on Activision as a subsidiary, Microsoft is also taking on a high-profile lawsuit.
• Female Activision employees alleged discrimination and a "frat boy" culture in lawsuits last year.

With Microsoft's $68 billion acquisition of Activision comes one of the gaming giant's Achilles heels — a high-profile sexual harassment lawsuit from last year that alleged a "frat boy" culture at the video game publisher.

Female employees claimed in the suit that they faced "constant sexual harassment," including enduring jokes about rape at work and unwanted advances, and discriminatory practices, like a male supervisor rejecting a woman's promotion because "she might get pregnant and like being a mom too much."

And experts told Insider that when the deal closes — which Microsoft says it expected later this year so long as it receives government approval — it will inherit that lawsuit in addition to everything else.

James Greifzu, a partner at Wiggin and Dana specializing in mergers and acquisitions, told Insider that Microsoft's agreement with Activision agreement is what's known as a stock deal, meaning Microsoft will take on the gaming company's legal obligations. The$68.7 billion price tag may even reflect the costs associated with grappling with the legal woes.

However, he said the "problem will remain with the target," the target being Microsoft's new subsidiary, Activision. But that doesn't mean Microsoft will be free from the reputational harm attached to the scandalous litigation — Greifzu said there's a chance it could devalue others business aspects that Microsoft owns.

"There's really going to be pressure on Microsoft from a cultural and societal perspective to have a plan to fix it from day one," Griefzu said.

An Activision Blizzard spokesperson said "both companies will continue to operate independently" until the deal closes, in response to Insider's inquiry of what will happen to its lawsuit. Microsoft did not immediately respond to Insider's request for comment.

Ann Olivarius, the founder of the law firm McAllister Olivarius that specializes in race and gender discrimination, told Insider that lawsuits like this typically could dissuade others from acquiring a company. But this is Microsoft we're talking about.

"In this case, these lawsuits have lowered the price of Activision, so probably Activision would not be on the market and be available for takeover if it hadn't been for the lawsuits," Olivarius said.

And given Microsft's $168.1 billion annual revenue, the cost associated with handling the lawsuit would be a drop in the bucket.

"The price that Microsoft is putting on the table is in the very high billions and Activision, these lawsuits are looking for millions," Olivarius said. "So it's really carfare."