As global technology giants stake their claims to a virtual future, Microsoft Corp (MSFT.O) is buying Activision Blizzard (ATVI.O) for $68.7 billion in the largest game industry deal in history.
Microsoft unveiled its largest-ever deal on Tuesday, which is expected to be the largest all-cash acquisition in history, bolstering its firepower in the expanding videogame market, where it competes with leaders Tencent (0700. HK) and Sony (6758.T).
It also represents the American multinational’s bet on the “metaverse,” virtual online worlds where people can work, play and socialize, as many of its biggest competitors are already doing.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Microsoft Chief Executive Satya Nadella said.
Microsoft, one of the biggest companies in the world largely thanks to corporate software such as its Azure cloud computing platform and Outlook franchise, is offering $95 per share – a 45% premium to Activision’s Friday close.
Activision’s stock was last up 26% at $82.10, still a significant discount to the offer price, reflecting concerns that the deal could end up in the crosshairs of regulators.
According to Andre Barlow of the legal firm Doyle, Barlow & Mazard PLLC, Microsoft has escaped the scrutiny that Google and Facebook have experienced in the past, but this purchase, which would make it the world’s third-largest gaming company, will put the Xbox manufacturer on politicians’ radars.
The deal comes at a time of weakness for Activision, maker of games such as “Overwatch” and “Candy Crush”. Before the deal was announced, its shares had slumped more than 37% since reaching a record high last year, hit by allegations of sexual harassment of employees and misconduct by several top managers.
The company is still addressing those allegations and said on Monday it had fired or pushed out more than three dozen employees and disciplined another 40 since July.
CEO Bobby Kotick, who said Microsoft approached him about a possible buyout, would continue as CEO of Activision following the deal, although he is expected to leave after it closes, a source familiar with the plans said.
In a conference call with analysts, Microsoft boss Nadella did not directly refer to the scandal but talked about the importance of culture in the company.
