# Microsoft to gobble up Activision in $69 billion metaverse bet
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-18
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Microsoft acquires Activision Blizzard for $68.7 billion in
Meta Description: Microsoft makes history with biggest-ever acquisition, betting big on metaverse with 45% premium offer for Activision. Get the details here.
URL: https://financedigest.com/microsoft-to-gobble-up-activision-in-69-billion-metaverse-bethtml

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By Subrat Patnaik

(Reuters) -Microsoft Corp is buying “Call of Duty” maker Activision Blizzard for $68.7 billion in the biggest gaming industry deal in history as global technology giants stake their claims to a virtual future.

The all-cash deal announced by Microsoft on Tuesday, its biggest-ever acquisition, will bolster its firepower in the booming videogaming market where it takes on leaders Tencent and Sony.

It also represents the American multinational’s bet on the “metaverse”, [virtual online worlds](https://www.financedigest.com/metas-new-quest-pro-headset-mixing-real-and-virtual-worlds-makes-debut.html "Meta’s new Quest Pro headset, mixing real and virtual worlds, makes debut") where people can work, play and socialize, as many of its biggest competitors are already doing.

[“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development](https://www.financedigest.com/mobile-games-developer-huuuge-says-has-24-2-million-at-svb.html "Mobile games developer Huuuge says has .2 million at SVB") of metaverse platforms,” Microsoft Chief Executive Satya Nadella said.

Microsoft’s [offer of $95 per share](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms") represents a premium of 45% to Activision’s Friday close. [Shares of Activision were at $83.35 in early trading](https://www.financedigest.com/social-trading-is-the-new-way-that-gen-z-are-getting-their-share-of-the-pie.html "Social Trading is The New Way That Gen Z Are Getting Their Share of The Pie").

The deal comes at a time of weakness for Activision, [maker of games](https://www.financedigest.com/ubisoft-shares-slump-20-after-french-video-game-maker-warns-on-revenue.html "Ubisoft shares slump 20% after French video game maker warns on revenue") such as “Overwatch” and “Candy Crush. Its shares have slumped more than 37% since reaching a record high last year, hit by [allegations of sexual harassment](https://www.financedigest.com/china-lodges-representations-over-alleged-harassment-at-manchester-consulate.html "China lodges representations over alleged harassment at Manchester consulate") of employees and misconduct by several top managers.

The company is still addressing those allegations and said on Monday it had fired or [pushed out more than three dozen employees and disciplined another 40 since July](https://www.financedigest.com/in-renewed-push-spain-to-tender-eu-funds-for-evs-batteries-in-july.html "In renewed push, Spain to tender EU funds for EVs, batteries in July").

CEO Bobby Kotick, who said Microsoft reached out to him for a possible buyout, would [continue to be the CEO of Activision following the deal](https://www.financedigest.com/volkswagen-strikes-below-inflation-wage-deal-continues-german-trend.html "Volkswagen strikes below-inflation wage deal, continues German trend").

In a conference call with analysts, Microsoft [boss Nadella did not directly refer to the scandal but talked about the importance of culture](https://www.financedigest.com/incoming-starbucks-boss-to-bring-consumer-insight-to-coffee-culture.html "Incoming Starbucks boss to bring consumer insight to coffee culture") in the company.

It’s critical for [Activision Blizzard](https://www.financedigest.com/bobby-kotick-leads-activision-blizzard-through-economic-turmoil.html "Bobby Kotick Leads Activision Blizzard Through Economic Turmoil") to drive forward on its renewed cultural commitments,” he said, adding “the success of this acquisition will depend on it.

METAVERSE [ARMS RACE’](https://www.financedigest.com/quantum-computing-in-finance-the-next-digital-arms-race.html "Quantum Computing in Finance: The Next Digital Arms Race?")

The [global gaming market was valued at $173.70 billion](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks") in 2021, and is expected to reach $314.40 billion by 2027, according to research firm Mordor Intelligence.

Microsoft can already claim a significant beachhead in the [gaming world as one of the big three console makers](https://www.financedigest.com/video-game-maker-cd-projekts-first-half-profit-beats-expectations.html "Video game maker CD Projekt’s first-half profit beats expectations"). It has been making big investments including up “Minecraft” maker Mojang Studios and Zenimax in multi-billion [dollar deals](https://www.financedigest.com/incentive-fm-secures-new-deal-with-dollar-uk.html "Incentive FM Secures New Deal with Dollar UK") in recent years.

It has also launched a popular [cloud gaming service](https://www.financedigest.com/cloud-migration-for-financial-services-organisations-whats-the-best-approach.html "Cloud Migration for Financial Services Organisations – What’s the best approach?"), which has more than 25 million subscribers.

Executives talked up Activision’s 400 million monthly active users as one major attraction to the deal and how [vital these communities](https://www.financedigest.com/why-is-communication-vital-in-the-event-of-a-cyber-attack.html "WHY IS COMMUNICATION VITAL IN THE EVENT OF A CYBER-ATTACK?") could play in Microsoft’s various metaverse plays.

Activision’s library of games could give [Microsoft’s Xbox gaming platform](https://www.financedigest.com/mercedes-benz-and-microsoft-collaborate-on-supply-chain-data-platform.html "Mercedes-Benz and Microsoft collaborate on supply chain data platform") an edge over Sony’s Playstation, which has for years enjoyed a more steady stream of exclusive games.

The likes of Netflix have already said they’d like to foray into gaming themselves, but Microsoft has come out swinging with today’s rather generous offer, which would make Microsoft the third largest gaming [company in the world,”](https://www.financedigest.com/kelda-technology-selected-as-one-of-thetop-30-cleantech-companies-in-the-world.html "Kelda Technology selected as one of thetop 30 cleantech companies in the world") said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Tech companies from Microsoft to Nvidia have placed big bets on the so-called metaverse, with the buzz around it intensifying late last year after Facebook renamed itself as [Meta Platforms](https://www.financedigest.com/meta-to-wind-down-nfts-on-platforms-amid-crypto-bust.html "Meta to wind down NFTs on platforms amid crypto bust") to reflect its focus on its virtual reality business.

This is a significant deal for the consumer side of the business and more importantly, [Microsoft acquiring Activision really starts the metaverse arms race,”](https://www.financedigest.com/microsoft-unveils-ai-office-copilot-in-fast-moving-race-with-google.html "Microsoft unveils AI office copilot in fast-moving race with Google") David Wagner, Equity Analyst and Portfolio Manager at Aptus Capital Advisors said.

“We believe the deal will get done,” he said, but cautioned “This will get a lot of looks from a regulatory standpoint.”

Lawmakers on Capitol Hill, who are considering a long list of antitrust bills aimed at reining in [Big Tech](https://www.financedigest.com/startups-spring-from-ashes-of-big-tech-purge.html "Startups spring from ashes of Big Tech purge") companies like Google and Facebook, will be skeptical of this transaction, said Andre Barlow of the law firm Doyle, Barlow & Mazard PLLC.

“Microsoft is already big in gaming,” he said.

(Additional reporting by Ankur Banerjee, Eva Mathews and Uday Sampath in Bengaluru, Kenneth Li in New York, Diane Bartz in Washington, Supantha Mukherjee in Stockholm; Writing by Pravin Char; Editing by Anil D’Silva and Carmel Crimmins)


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