What Happens to My Activision Stock When Microsoft Buys It?
The short and sweet answer is: if you owned Activision Blizzard (ATVI) stock when the Microsoft (MSFT) acquisition closed on October 13, 2023, your ATVI shares were converted into cash. Specifically, for each share of ATVI you owned, you received $95.00 in cash. The merger was approved, and the deal was consummated before the market opened on that day. This means ATVI stock no longer exists as a standalone entity on the stock market. Your brokerage account should have reflected the cash payment shortly thereafter.
The End of an Era: ATVI’s Acquisition by Microsoft
The acquisition of Activision Blizzard by Microsoft marked a monumental shift in the gaming industry. This $69 billion deal consolidated some of the biggest names in gaming under one umbrella, including franchises like Call of Duty, World of Warcraft, and Diablo. For investors, it represented the culmination of a long and often uncertain journey, marked by regulatory hurdles and fluctuating stock prices. Let’s dig deeper into what this means for former ATVI shareholders and the gaming landscape.
Understanding the Mechanics of the Merger
A merger, particularly one of this magnitude, involves complex financial and legal processes. In this case, Microsoft opted for an all-cash transaction, meaning no Microsoft stock was exchanged for ATVI shares. This provided certainty for ATVI shareholders who received a predetermined amount of cash for their holdings, regardless of Microsoft’s future stock performance. This transaction made Microsoft the world’s third-largest gaming company by revenue, behind Tencent and Sony.
What Happens to Your Brokerage Account?
After the merger closed, your brokerage account would have reflected the change. The ATVI shares previously held in your account were replaced with the corresponding cash value, calculated as $95.00 per share. The ticker symbol ATVI was delisted, meaning it no longer trades on any stock exchange. It’s essential to review your account statements to confirm the transaction and ensure accuracy. In any discrepancies, you will want to contact your brokerage firm immediately.
Frequently Asked Questions (FAQs) About the Microsoft-Activision Merger
1. What happened to ATVI options after the merger?
As the article states, settlement in Activision Blizzard, Inc. options took place through OCC’s cash settlement system. So, options contracts were settled in cash based on the $95 per share acquisition price.
2. Why didn’t ATVI stock immediately trade at $95 before the merger?
The stock rarely trades precisely at the offer price before a merger is finalized due to market uncertainty. Factors like regulatory approval risks, potential deal cancellations, and the time value of money (i.e., waiting for the payout) influence the stock price. The market always prices in some level of risk that the deal could fall apart.
3. What does it mean for Microsoft to acquire Activision Blizzard?
For Microsoft, this acquisition significantly strengthens its Xbox Game Pass subscription service, bringing a wealth of popular franchises under its control. This enhances Microsoft’s competitive position in the gaming industry, allowing it to better compete with industry leaders like Sony and Tencent.
4. Was holding ATVI stock a good investment strategy leading up to the merger?
Analyst ratings generally indicated a “Hold” consensus leading up to the merger. The potential upside was limited, as the stock price hovered near the acquisition price. The average price target was close to $95, indicating that analysts believed the deal was likely to go through. It was a relatively low-risk investment with limited potential for significant gains or losses prior to the close.
5. What are the benefits of Microsoft acquiring Activision for consumers?
Consumers should benefit from additional cloud gaming services and access to a broader library of games, including Activision titles like Call of Duty, through platforms like Xbox Game Pass. This acquisition also might lead to innovation and improvements in game development.
6. Why was the Microsoft-Activision deal so heavily scrutinized by regulators?
The deal faced intense scrutiny due to concerns about potential anti-competitive practices. Regulators were worried that Microsoft could leverage its market dominance to unfairly favor its own platforms and services, limiting choices for consumers and stifling competition in the gaming industry.
7. How did Warren Buffett and Berkshire Hathaway play a role in the Activision deal?
Warren Buffett’s Berkshire Hathaway acquired a significant stake in Activision Blizzard prior to the merger announcement. Buffett’s view was that the risk/reward looked attractive. This investment signaled confidence in the deal’s eventual approval and contributed to the stability of ATVI’s stock price.
8. What happens to ATVI employees after the Microsoft acquisition?
The impact on ATVI employees is complex. While some may experience job security and new opportunities within Microsoft, there’s also the possibility of restructuring and layoffs as Microsoft integrates the two companies. The long-term effects on employment will depend on Microsoft’s strategic decisions.
9. Will Activision games become exclusive to Xbox platforms after the merger?
Microsoft has stated that it intends to bring some Activision titles to other platforms. However, exclusive content and early access for Xbox Game Pass subscribers are likely. The extent of exclusivity remains a key point of discussion and will likely vary by title.
10. What is Microsoft’s biggest deal with Activision Blizzard?
Microsoft’s deal with Activision Blizzard at $69 billion is their biggest deal to date. This deal brought in video games like Call of Duty, World of Warcraft, and Diablo to Microsoft.
11. What are some potential cons for Activision due to the merger?
The merger could result in a loss of creative control for some Activision studios, as Microsoft integrates their operations. The corporate culture of Activision may shift under Microsoft’s leadership, potentially impacting employee morale and game development processes.
12. How will the Activision acquisition affect the future of the gaming industry?
The acquisition could lead to increased consolidation within the gaming industry, as other major players seek to expand their portfolios through mergers and acquisitions. It could also accelerate the growth of cloud gaming and subscription services, transforming how people access and play games.
13. Why was the Microsoft-Activision deal delayed?
The deal was delayed primarily due to regulatory concerns raised by various competition authorities around the world, including the UK’s Competition and Markets Authority (CMA) and the US Federal Trade Commission (FTC). These agencies investigated whether the merger would harm competition in the gaming market.
14. Will Activision stock split now that the merger is complete?
No. Activision stock will not split now that the merger is complete. The stock no longer exists as a standalone entity. The planned stock split mentioned in some reports was irrelevant after the acquisition closed.
15. How can I learn more about the impact of games and gaming on society?
To further your understanding of the world of games and their implications, you should explore resources like the Games Learning Society. It offers valuable insights into the intersection of games and learning. You can also consult with GamesLearningSociety.org.