Microsoft has reportedly agreed to take out gaming giant Activision Blizzard in a $68.7 billion all-cash deal, marking Microsoft’s costliest acquisition in history — and perhaps its most important in recent history.
The proposed deal will see Microsoft pay $95/share, a 45% premium to the company’s stock price as it traded before the announcement. The acquisition comes after months of internal turmoil at Activision Blizzard.
Weakness is not forgiving to companies, especially to media properties like A-B. Activision Blizzard was definitely weak — and ripe for takeout.
However, there’s no guarantee this deal will close.
Microsoft has spent the last few years stacking up gaming properties to build the foundation of its industry-leading Xbox Game Pass. With Microsoft’s acquisition of Zenimax Media (the owner of Bethesda) last year, Xbox grew its game studio footprint to 23, putting Microsoft in a fundamentally different ballpark from its competitors. Microsoft’s commanding presence in the gaming industry makes it likely that this deal will be shot down by regulators.
After all, Microsoft is the second-biggest company in the world… just hours before today’s deal ran off the presses, the U.S. Federal Trade Commission (FTC) and Department of Justice (DOJ) indicated their desire to rewrite merger rules to prevent large mergers.