Microsoft to buy Activision Blizzard for $68.7 billion

Microsoft this morning announced plans to buy games mega-publisher Activision Blizzard for a record $68.7 billion. The move, when finalized, would bring in franchises like Call of Duty, Monitoring, Diablo, World of Warcraft, Starcraft, and many more under the Xbox maker umbrella.

Today’s announcement follows Microsoft’s $7.8 billion acquisition of Bethesda announced just 15 months ago. After some initial confusion about what this meant for Bethesda’s cross-platform titles, it has since become clear that most of Bethesda’s biggest franchises, such as old scrolls, will not appear on competing consoles such as the PlayStation 5.

The same could certainly happen for Activision Blizzard’s big games. Microsoft notes in its announcement that Activision Blizzard games would be part of its Game Pass program, which currently has 25 million subscribers. “With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lines of gaming content around. of the industry,” the company said. “At closing, Microsoft will have 30 in-house game development studios, along with additional esports publishing and production capabilities.”

Along with new console exclusives, the acquisition includes candy Crush maker King, giving Microsoft a new route into the massive mobile games market. “With great teams and cutting-edge technology, Microsoft and Activision Blizzard will enable gamers to enjoy the most immersive franchises, like Halo and Warcraft, virtually anywhere they want,” Microsoft said in a statement.

If that sounds familiar, that’s because it sounds like what Take-Two said about its recent $12.7 billion acquisition of mobile gaming powerhouse Zynga. “Take-Two has an extensive catalog of commercially and critically successful console and PC titles with engaged and loyal gaming communities, and there is a significant opportunity to create mobile games and new cross-platform experiences for many of these properties,” the company said. noted.

Buy the dip?

The all-cash transaction values ​​Activsion Blizzard at $95 per share, a significant premium to Friday’s closing price of $65.39. But that stock price is down significantly from its 2021 high of $103.81, which it hit in February.

The stock drop reflects a tough time for Activision Blizzard, which faced months of controversy after the state of California filed a lawsuit against the company alleging widespread sexual discrimination and harassment. CEO Bobby Kotick has come under particular criticism after new reports suggest he hid information about some of the allegations at the company from the board.

While Kotick reportedly told colleagues he would consider stepping down in November, Microsoft said in a statement today that “Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will continue to focus on efforts to further strengthen the company’s culture and accelerate the company’s growth. Once the agreement is reached, the Activision Blizzard business will report to Phil Spencer, CEO of Microsoft Gaming.”

The publisher is also facing an indefinite strike from a group of workers protesting the treatment reserved for testers at its Raven Software subsidiary.

The allegations about Activision Blizzard have prompted vague statements of concern from all three major console makers. Microsoft’s Phil Spencer told employees in November that the company was “evaluating all aspects of our relationship with Activision Blizzard and making continual proactive adjustments… This type of behavior has no place in our industry.”

And just last week, Spencer was quoted in The New York Times saying the company had “changed the way we do certain things with [Activision], and they know that.” Meanwhile, Spencer said he would “rather help other businesses than try to punish” and that “it’s obviously not our position to judge who the CEO” of other companies.

“Any of the partners that are there, if I can learn from them or if I can help with the journey that we’ve been on Xbox by sharing what we’ve done and what we’ve built, I would prefer by far do that rather than getting into some sort of middle finger with other companies that are out there,” he added.

“As a company, Microsoft is committed to our journey toward inclusion in all aspects of gaming, among employees and players,” Spencer said in a statement accompanying today’s announcement. “We deeply value individual studio cultures. We also believe that creative success and autonomy go hand in hand with treating each person with dignity and respect. We hold all teams and leaders to this commitment. We are looking forward to extending our culture of proactive inclusion to larger teams at Activision Blizzard.”

Not a done deal

Although the deal has been approved by Microsoft and Activision’s boards of directors, the deal is still “subject to customary closing conditions and completion of regulatory review,” as Microsoft says. The sheer magnitude of the merger may also warrant review by the Federal Trade Commission, which could raise antitrust concerns on the proposed merger. That said, Microsoft said on an investor call on Tuesday morning that the merger would only make it the world’s third-largest games company by revenue, behind Tencent and Sony.

The deal is not expected to close until Microsoft’s 2023 fiscal year, which begins July 1. The two companies will continue to operate separately until then.

This is a breaking story that will be updated as developments warrant.