Forum Topics Microsoft acquisition of activision
Hackofalltrades
one year ago

Well, I didn't see this one coming.

The UK regulator has blocked the takeover for the UK at least. https://www.theguardian.com/technology/2023/apr/26/microsoft-bid-for-activision-blizzard-blocked-by-uk-competition-regulator

Seems there's a fair bit of risk on this one.


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Hackofalltrades
2 years ago

The Federal Trade Commission is apparently looking to send the merger before a judge 3-1.


https://au.investing.com/news/stock-market-news/the-ftc-moves-to-block-microsofts-activision-blizzard-deal-432SI-2739883


There's a blog with some analysis here. Not sure whether I agree, but the blog is suggesting this decision may be partially political. http://www.fosspatents.com/2022/12/us-federal-trade-commission-reportedly.html


Either way I think this increases the risk of the deal falling through.

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Hackofalltrades
2 years ago

Strangely, Activision is now trading at $73.2, when the takeover is set for ~July next year.

I think part of this reflects increased inflation and interest rates, thus decreasing the real return and making alternates more attractive.

It also seems like there seems to be some worry the deal might not go through, but I'm not exactly sure why.


https://www.cnbc.com/2022/04/27/activision-blizzard-sinks-to-lowest-point-since-microsoft-deal-news.html


Decent arbitrage opportunity if the deal goes through. Potential to get burned if not. I own some shares.

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Hackofalltrades
3 years ago

Microsoft have placed a bid of $95 per share on Blizzard/Activision. https://www.forbes.com/sites/greatspeculations/2022/01/18/microsoft-to-acquire-activision-blizzard-for-69-billion/?sh=3db7d604285d

I hold a small amount of Activision shares and am not sure how I feel about this. On one hand, that's a nice instant profit. On the other hand, I really like Activision as a company and am kind of annoyed to lose that exposure!

Activision makes quality games that are very popular and that gamers like. Warcraft, Starcraft, Hearthstone , Diablo, DOTA (somewhat??) and other franchises. I play Hearthstone and have been particularly impressed with their Battlegrounds innovation and the direction they have taken that after release - it's the best auto battler out there imo. There have been culture issues in Activision recently (bullying, etc.), is the reason for the recent share drop, but provided they can sort these issues, I don't think these are going to hurt the company long term - the franchises hold a lot of value.

In terms of Microsoft, I think it's a genuinely superb acquisition. They are acquiring a quality company in an industry with significant runway for growth, including in esports.

There is a significant gap between the current price $82 and $95. Motley fool mentioned something about a risk of regulatory approval. I can't really see why this would be the case. There is plenty of competition and gaming is a worldwide competitive industry. This could be an arbitrage opportunity.

I haven't done an in detail valuation of Blizzard/Activision previously sorry.


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Hackofalltrades
3 years ago

Yep I believe you are. I haven't looked into that in detail, I know more about the games - they have a good record of making them. Game franchises are very strong brands.



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Rocket6
3 years ago

@shivrak & @Stuey727

Wow, I somehow missed this today. Now that I am out from my rock...this is a huge deal. And what a coup by Microsoft. I think there is a good case here that Microsoft is getting away with daylight robbery. There is a general consensus by commentators that Activision's 'fair value' is somewhere between the $90-100 mark. So Microsoft - at a proposed takeover price of $95 per share - is looking to acquire one of the world's leading gaming companies (and with it many leading titles) by essentially offering what many believe it to be worth. One could argue this is unheard of in this day and age - and it very much seems that Microsoft is exploiting current and past issues that have restrained (for the lack of a better word) Activision's share price for the better part of the year.

That said, Microsoft will want to try and change the story post-acquisition given Activision's problems, so I can't see any world where the current CEO stays at the helm. For context, Activision has had real issues with sexual harrassment accusations, bullying concerns and generally what is widely considered a toxic place to work. It won't be easy for Microsoft - cultural issues within a company are often deeply embedded - but they obviously believe they can turn this around. It should be their first priority.

I think this also has significant implications on the gaming sector in general, when one of the world's largest companies - who already has quite a significant stake in gaming (Xbox etc) - wants to further cement their position in the industry. The acquisition makes them the 3rd largest gaming company behind Tencent and Sony. I think it also signals that Microsoft will continue to invest in game pass - and the acquisition of Activision (and specifically the additional Call of Duty, which needs no explanation) will further increase and enhance game pass' appeal.


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