Microsoft buys Activision Blizzard: This is behind the billion-dollar deal

The news hit like a bomb: Microsoft wants to buy the video game company Activision Blizzard for around 70 billion US dollars. But what is behind the deal? What goals does Microsoft pursue and: Is the takeover already in dry cloth?

There are things in life that you can’t buy. However, billion-dollar tech companies are apparently not one of them. Because the news that Microsoft wants to take over the video game company Activision Blizzard hit like a bomb. Cost: around 70 billion US dollars.

For Microsoft, the deal makes sense on several levels. The company could not only build up a new foothold, but also weaken the competition. But the company may also bring some problems into the house with the takeover.

Activision Blizzard: This is behind the billion-dollar deal

Microsoft wants to acquire Activision Blizzard for $95 per share. This corresponds to a significant premium compared to the closing price on the previous trading day, which was only around 65 US dollars.

Microsoft values the video game group with a price of 68.7 billion US dollars. This was announced by the company on Tuesday, January 18, 2022 in an official blog post.

As soon as the acquisition is completed, Microsoft would become the third largest video game manufacturer in the world – just behind Sony and Tencent. With the deal, the software group primarily wants to expand its gaming business and invest in the areas of mobile, PC, cloud and console.

Competition for Facebook?

With the planned acquisition of Activision Blizzard, Microsoft would bring some popular video game classics into the house, including World of Warcraft, Diabolo and Starcraft. With the first-person shooter Call of Duty, a title would also be added, which is regularly at the top of the worldwide sales charts in the gaming sector.

Above all, Microsoft wants to expand its Game Pass, which has recently reached a new high with 25 million subscribers. With the games from Activision Blizzard, several million new subscribers would probably be added.

In order to become one of the most attractive providers in the gaming sector, the software group wants to integrate as many new titles as possible into the Game Pass. With the planned acquisition, however, Microsoft also wants to take another step towards Metaverse.

Activision Blizzard’s resources could represent some new building blocks in this area. “Gaming is the most dynamic and exciting category of entertainment on all platforms today and will play a key role in the development of Metaverse platforms,” said Microsoft CEO Satya Nadella.

Sony shares lose thirteen percent in the meantime

With the deal, however, Microsoft would not only create a new foothold in the Metaverse and compete with Facebook. Above all, the software company would also weaken its counterparties in the gaming industry. Investors fear a dominance of Microsoft’s Xbox over Sony’s Playstation.

Because the company could decide by the acquisition of the Activision games to release popular titles such as Call of Duty in the future only for its own console.

On the stock market, however, there was something like fear and panic after Microsoft’s announcement. In the meantime, sony’s share price has collapsed by thirteen percent. This corresponds to a decline not seen since 2014.

Could the deal still fail?

As advantageous as the deal sounds for Microsoft at first, it could also bring some problems to the company. Because the corporate culture and working conditions at Activision Blizzard have recently been clearly criticized. Several leaders have been accused of sexual harassment.

According to the Wall Street Journal, the company has mucked out and fired dozens of employees, advised them to leave and initiated various disciplinary proceedings. However, Activision CEO Bobby Kotick was also criticized for the poor working atmosphere.

As a result of the takeover, he is to remain at the top of the company. However, it will probably take a few more months before that happens. Because the US competition authorities still have to approve the deal. Whether and how realistic this is is still unclear.

However, Microsoft seems confident about its plans. The Company refers to the examination by the antitrust authorities as customary closing conditions. The boards of directors of Microsoft and Activision Blizzard have also already approved the transaction. The final takeover is expected to take place in the 2023 financial year.

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