Microsoft to Acquire Activision Blizzard for $68.7 Billion
Posted on 01/18/2022
Microsoft Corporation announced plans to acquire Activision Blizzard Inc., a game development and interactive entertainment content publisher giant. This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent Holdings Limited and Sony Corporation. The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty,” and “Candy Crush,” in addition to global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees. Microsoft is willing to spend billions on acquisitions to bolster its gaming efforts. Microsoft bought Bethesda in 2021 for US$ 7.5 billion.
Microsoft will acquire Activision Blizzard for US$ 95.00 per share, in an all-cash transaction valued at US$ 68.7 billion, inclusive of Activision Blizzard’s net cash.
Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.
Xbox
The acquisition seeks to enhance Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 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 lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities. Microsoft’s Xbox will now officially own “Overwatch,” “Call of Duty,” and more. After the deal closes, the entire business will be owned by Xbox.
The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s shareholder approval. The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard.
Advisors
Goldman Sachs & Co. LLC is serving as financial advisor to Microsoft and Simpson Thacher & Bartlett LLP is serving as legal counsel. Allen & Company LLC is acting as financial advisor to Activision Blizzard and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.
