Microsoft Corporation (NASDAQ:MSFT) has agreed to buy Activision Blizzard, Inc. (NASDAQ:ATVI). The offer means Activision shareholders would receive $95.0 per share, a 45.3% premium to the share price before the deal was announced. The purchase will be on an all-cash basis, and the offer values Activision Blizzard at $68.7bn.
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If approved by shareholders and regulators, the deal is expected to complete in the 2023 financial year.
Activision shares rose 29.0% in pre-market trading.
Microsoft-Activision Blizzard Deal
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:
“Activision Blizzard holds some of the most valuable IP in the world thanks to the likes of Call of Duty and a host of other games with dogmatically loyal customers. However, today’s news isn’t just about people liking gaming, we’ve known that for a long time. It says a lot more about how gaming is viewed as an integral part of our future social and digital lives. The mushrooming popularity of this hobby is why Microsoft has delved into its very well-lined pockets and splashed out on the gaming production giant. From an outside perspective, the logic is fairly flawless.
Microsoft is already the go-to provider of must-have software, so tacking on a gaming arm is a stroke of genius from a cross-selling potential standpoint. The likes of Netflix have already said they’d like to foray into gaming themselves, but Microsoft has come out swinging with today’s rather generous offer, which would make Microsoft the third largest gaming company in the world.
Execution risk is still a factor though. This still marks some new territories for Microsoft and is hardly a small-fry deal, so the time to pop champagne will be when the deal has first been fully approved, and second, showed that Microsoft’s model can stomach this new gaming hoard.”
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