Microsoft (NASDAQ: MSFT) has today confirmed its largest-ever acquisition, more than doubling its previous record. The technology company announced a deal that will see it purchase gaming behemoth Activision Blizzard (NASDAQ: ATVI) for a price of $68.7 billion. This deal eclipses Microsoft’s previous record signing – the $26 billion acquisition of LinkedIn in 2016 – by quite a margin.
Shares of Activision were up roughly 37% in pre-market trading before being halted for news pending. Microsoft stock has fallen by 1.5% at the time of writing.
Details of the deal
The deal will see Microsoft purchase Activision Blizzard at a price of $95 per share in an all-cash transaction. This values the company at $68.7 billion, almost $20 billion above its current market valuation. The deal is expected to close in the fiscal year 2023 pending regulatory reviews and Activision shareholder approval. Bobby Kotick, Activision’s controversial CEO, will retain his position and will report directly to the CEO of Microsoft Gaming, Phil Spencer.
What does Activision Blizzard do?
Activision is one of the world’s leading producers of video games. It houses three divisions: Activision, Blizzard, and King Digital. Activision and Blizzard both develop and produce a number of highly popular games including the popular ‘Call of Duty’ and ‘World of Warcraft’ franchises, while King Digital focuses on the company’s mobile games offerings.
Activision has studios across the globe and currently has almost 10,000 employees. The company boasts close to 400 million monthly active users across 190 countries, all of whom will now be integrated into Microsoft’s gaming platform.
What does this mean for Microsoft?
This deal will make Microsoft the third-largest gaming company in the world by revenue, with only Tencent and Sony besting it. This acquisition comes on the back of a number of smaller investments in this industry, with Microsoft purchasing ‘Minecraft’ publisher Mojang for $2.5 billion in 2014 as well as game developer Bethesda for $7.5 billion last year.
Activision’s stellar position in the mobile gaming space will be of particular interest to Microsoft, with “95% of all players globally enjoying games on mobile” according to the company’s press release. Through this purchase, Microsoft instantly generates a massive presence for itself in the mobile world.
This deal will also serve to bolster Microsoft’s Game Pass offering. The subscription gaming service currently has over 25 million active subscribers who gain access to over 100 game titles through their monthly subscription. The addition of some of Activision’s stellar back catalog will make Game Pass a much more enticing proposition to both new and existing customers.
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