Microsoft buys video game maker Activision Blizzard for $68.7 billion

0

Microsoft has agreed to buy video game maker Activision Blizzard for about $68.7 billion, including net cash, in the biggest deal ever for the Bill Gates-founded tech company.

Under the terms of the deal, Microsoft would pay shareholders of the company behind game franchises such as Call of Duty, World of Warcraft and candy Crush $95 per share, a 45% premium to its closing price last week.

It’s the latest in a wave of deals in the gaming industry. Take-Two Interactive, the creator of the popular Grand Theft Auto series of games, agreed last week to buy rival Zynga, the maker of FarmCity and Words between friends, for $12.7 billion.

The purchase would cement Microsoft’s big lead over other tech giants as the video game industry finds itself at the center of the latest rush for digital entertainment dominance.

In addition to amassing content that would strengthen its position against longtime rival Sony, the world’s biggest software company said the deal with Activision would serve as a springboard for its move to the Metaverse, the name given to worlds. immersive virtual games that every major tech company is racing. to construct.

“Gaming is the fastest growing and most exciting entertainment category on any platform today and will play a key role in the development of metaverse platforms,” said Satya Nadella, president and CEO of Microsoft.

The move represents Nadella’s biggest gamble since taking over as CEO in 2014. It makes Microsoft the world’s third-largest video game company by revenue, behind Tencent in China and Sony in Japan, while also leveraging the technology group’s strengths in personal computing and business software.

Nadella said the large online reach of both companies would give Microsoft a head start in building online gaming communities that would eventually reach billions of people.

The 400 million monthly users of Activision games like candy Crush, along with the 25 million subscribers to Microsoft’s Game Pass subscription gaming service, would leave the company with “one of the largest and most engaged communities in all of entertainment,” he said. .

The news sent shares of other major video game publishers up significantly, as it was expected to lead to more deals in the industry. Electronic Arts, whose games include the Fifa and crazy sports franchises, grew by more than 5%, while Ubisoft, maker of Assassin’s Creed, increased by 8%.

Microsoft has fallen with Activision shares down nearly 30% since a lawsuit was filed against the company in July alleging widespread sexual harassment and gender pay issues within the company. business.

As Microsoft shares soared under Nadella’s tenure, filings show he built up a stake in the company’s stock that now stands at around $255 million, even after selling around half of its shares at the end of November, raising $285 million.

That compares to Activision Blizzard chief executive Bobby Kotick, who owns stock in the games company worth more than $370 million at Microsoft’s proposed takeover price.

Kotick’s $155 million salary package for 2020, which makes him one of the highest-paid chefs in the United States, sparked protests from some investors in June.

The apparent decision to keep Kotick on comes after he admitted the company’s initial responses to revelations of harassment cases were “tone-deaf”.

“We, like many companies, have had opportunities for culture improvement,” Kotick told the FT on Tuesday. “We have moved with speed and unlimited resources to change the culture of the workplace”, adding “it’s a continuous work”.

The company laid off 20 employees in October as part of an effort to clean up its culture following allegations of widespread gender discrimination and harassment.

Kotick said Activision was no longer big enough to compete with top game companies such as Tencent and Sony and a slew of potential deep-pocketed competitors including Apple, Google, Amazon and Netflix.

“We realized there were many categories of technology and talent that we needed to access that we didn’t and couldn’t develop fast enough,” he said, naming platforms. -Specially designed cloud forms for streaming games or cyber security software to protect. player data.

Activision shares rose 37% in premarket trading after the deal was announced. The company said that with the parties seeking regulatory approval, an agreement is expected to be reached during Microsoft’s fiscal year ending June 30, 2023.

Regarding the potential antitrust scrutiny of a deal that will combine two top gaming companies, Kotick said there has “never been more competition than there is today. . . this is a big motivating factor behind this transaction.

Share.

About Author

Comments are closed.