Microsoft and Activision Blizzard: Deal Closed! The Saga’s End and What It Means
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The monumental question that plagued the gaming world for nearly two years – Will Microsoft buying Activision go through? – has finally been answered. Yes, the acquisition is complete. After navigating regulatory hurdles, legal challenges, and intense scrutiny, Microsoft officially closed its $69 billion deal for Activision Blizzard on October 13, 2023. This acquisition marks a pivotal moment in the gaming industry, reshaping the landscape and ushering in a new era of competition.
The Long and Winding Road to Acquisition
The journey to this point was far from smooth. Announced in January 2022, the merger faced immediate resistance from regulatory bodies worldwide, particularly the U.S. Federal Trade Commission (FTC) and the UK’s Competition and Markets Authority (CMA). Concerns centered on potential anti-competitive practices, specifically Microsoft’s control over popular Activision Blizzard franchises like “Call of Duty”.
The FTC initially sought to block the deal, arguing that it would give Microsoft an unfair advantage in the gaming market. The CMA also voiced similar concerns, ultimately blocking the merger in its initial assessment. However, Microsoft persisted, making concessions to address regulators’ anxieties. These included legally binding agreements to keep “Call of Duty” available on rival platforms like PlayStation, ensuring that the franchise would not become an Xbox exclusive.
After months of legal battles, negotiations, and revised proposals, the CMA finally approved the deal, paving the way for its completion. The U.S. FTC, while still expressing concerns, did not succeed in preventing the merger. The closure of the acquisition signifies a major victory for Microsoft, positioning them as a dominant force in the gaming industry.
The Impact on the Gaming World
The acquisition of Activision Blizzard has profound implications for the gaming world. Here are some key takeaways:
- Microsoft’s Enhanced Gaming Portfolio: The deal significantly strengthens Microsoft’s gaming arsenal, adding iconic franchises like “Call of Duty,” “World of Warcraft,” “Overwatch,” “Diablo,” and “Candy Crush” to its portfolio.
- Game Pass Boost: Microsoft plans to integrate Activision Blizzard’s games into its Game Pass subscription service, providing subscribers with access to a vast library of titles. This move is expected to attract more subscribers and solidify Game Pass’s position as a leading gaming subscription platform.
- Increased Competition: The merger intensifies competition in the gaming market, particularly between Microsoft and Sony. Microsoft’s expanded gaming catalog could challenge Sony’s dominance in the console market and beyond.
- Mobile Gaming Expansion: Activision Blizzard’s mobile gaming prowess, particularly through King (the creators of “Candy Crush”), will enable Microsoft to expand its presence in the rapidly growing mobile gaming sector.
- Implications for Activision Blizzard Employees: The acquisition brings Activision Blizzard’s 8,500 employees into the Microsoft fold. The long-term impact on these employees remains to be seen, but Microsoft has pledged to foster a positive and inclusive work environment.
What’s Next?
With the acquisition complete, Microsoft will now focus on integrating Activision Blizzard into its Xbox division. This process will involve restructuring, streamlining operations, and leveraging the combined resources of both companies to develop new and innovative gaming experiences. The future holds many possibilities, including new “Call of Duty” titles, expansions to existing franchises, and the creation of entirely new gaming IPs. This monumental deal emphasizes the role of education and collaboration in the gaming industry, as highlighted by organizations like the Games Learning Society , which aims to foster innovation and learning within the games community.
Frequently Asked Questions (FAQs)
What happens to my Activision stock now that the merger is complete?
Activision stockholders will receive $95 in cash for each share of Activision they owned prior to the close of the merger.
Did Microsoft pay for Activision in cash?
Yes, Microsoft acquired Activision Blizzard through an all-cash deal, paying $95 per share.
Why was Microsoft initially blocked from buying Activision?
Regulatory bodies like the FTC and CMA initially blocked the deal due to concerns about potential anti-competitive practices. They argued that the merger would give Microsoft too much power in the gaming market.
Will “Call of Duty” become an Xbox exclusive?
Microsoft has committed to keeping “Call of Duty” available on PlayStation, despite owning Activision Blizzard.
What happens to ATVI options after the merger?
Settlement in Activision Blizzard, Inc. options will take place through OCC’s cash settlement system. Each existing ATVI Common Share was converted into the right to receive $95.00 net cash per share.
How long did the Microsoft Activision deal take to complete?
The Microsoft Activision deal took approximately 21 months to complete, from the initial announcement to the final closure.
Will Activision stock recover?
Activision Blizzard stock will no longer trade under the ticker ATVI. Stockholders have been compensated and the company is now a subsidiary of Microsoft.
Why did Warren Buffett sell his Activision shares?
Warren Buffett’s investment in Activision was a form of arbitrage. He viewed investors as too pessimistic that regulators would approve the merger. He sold his shares when the price was at a level where his anticipated return was realized.
Why was Activision stock not always trading at $95?
Due to uncertainties surrounding regulatory approval, Activision Blizzard shares never formed the narrow trading range typically seen in acquisition scenarios.
Why did Microsoft want to buy Activision Blizzard?
Microsoft sought to acquire Activision Blizzard to strengthen its gaming portfolio, expand its Game Pass offering, compete more effectively with Sony, and expand its presence in mobile gaming.
What is the Microsoft Activision special dividend?
Activision declared a cash dividend of 99 cents, payable to shareholders of record on August 2nd.
What will Microsoft do with Activision Blizzard?
Microsoft plans to integrate Activision Blizzard into its Xbox division, leveraging its game studios, franchises, and talent to develop new and innovative gaming experiences.
Were gamers suing to stop Microsoft from buying Activision Blizzard?
Yes, some gamers filed lawsuits challenging the merger, citing concerns about potential anti-competitive effects. These lawsuits did not ultimately prevent the deal from closing.
Who are the largest shareholders of Activision stock?
Largest shareholders included Fmr Llc, Wellington Management Group Llp, Boston Partners, Vanguard Group Inc, Invesco Ltd., BlackRock Institutional Trust Company, N.A., Ninety One UK Ltd, FIL Ltd, State Street Corp, and BlackRock Advisors LLC.
Will Activision stock split?
Activision Blizzard previously announced a two-for-one stock split years ago, but no recent split has occurred or will occur now that the acquisition is complete. This historic deal is more than just a business transaction; it is a reshaping of the gaming world. The potential for innovation and creativity is now limitless, promising a bright future for gamers worldwide.