How much is the breakup fee for Activision and Microsoft?

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How much is the breakup fee for Activision and Microsoft?

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The breakup fee for Activision and Microsoft is $4.5 billion, which was increased from the original $3 billion and then $3.5 billion as the deal’s deadline was extended. This fee is to be paid by Microsoft to Activision if the deal isn’t completed, due to the termination or “breakup” of the planned merger.

Overview of the Microsoft-Activision Deal

Introduction to the Deal

The Microsoft-Activision deal is a significant acquisition in the gaming industry, with Microsoft agreeing to buy Activision Blizzard for $68.7 billion, or $95 per share. This deal has faced opposition and uncertainties, leading to extensions of the deadline and changes in the breakup fee.

Frequently Asked Questions (FAQs)

General Questions

  1. What is the Microsoft-Activision deal about?: The deal involves Microsoft acquiring Activision Blizzard, the maker of popular games like Call of Duty and Candy Crush, for $69 billion.
  2. Is the Microsoft-Activision deal done?: Yes, Microsoft has finalized its $68.7 billion deal to acquire Activision Blizzard.
  3. How much is Microsoft paying for Activision per share?: Microsoft is paying $95 per share for Activision.

Breakup Fee and Deal Termination

  1. What happens if the deal isn’t completed?: If the deal isn’t completed, there’s a termination, or “breakup,” fee to be paid by Microsoft to Activision.
  2. How much was the original breakup fee?: The original breakup fee was set at $3 billion.
  3. How much is the current breakup fee?: The breakup fee has been increased to $4.5 billion.

Impact on Stockholders and Share Prices

  1. What happens to my Activision stock after the merger?: Activision stockholders will receive $95 for each share of Activision they owned prior to the close.
  2. Why is ATVI not trading at $95?: Activision Blizzard shares have never formed a narrow trading range due to uncertainties plaguing the deal, causing the stock to trade below Microsoft’s offer price of $95.
  3. Should I buy Activision shares?: According to analysts, Activision Blizzard currently has a Zacks Rank of #2 (Buy), indicating it might be a good time to buy.

Details About the Deal and Ownership

  1. What is Microsoft’s biggest takeover?: Microsoft has completed its $69 billion takeover of Activision Blizzard, the gaming industry’s biggest ever deal.
  2. Does Microsoft own Call of Duty now?: Yes, Microsoft now owns the rights to Call of Duty from the Activision fold, among other big IPs.
  3. Who owns the most shares in Activision?: Robert Kotick, Activision’s outgoing chief executive, owns the most shares, with 3,908,698 shares.

Analysis and Recommendations

  1. Did Microsoft overpay for Activision?: While many think Microsoft overpaid with the $70 billion price tag, the deal facilitates Category Acceleration and is not just a consolidation deal.
  2. Is Activision a hold or sell?: The consensus among Wall Street analysts is that investors should “hold” ATVI shares, with an average price target representing a 0.13% increase from the current price.
  3. Is ATVI a good buy right now?: With 16 hold ratings and 4 buy ratings for the stock, the consensus is to “hold” ATVI shares, but individual investment decisions should be based on personal research and financial advisors’ recommendations.

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