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Microsoft has agreed to buy video game maker Activision Blizzard, for around $68.7bn, including net cash, in the biggest deal ever for the company.
Under the terms of the deal, Microsoft would pay shareholders of the company behind gaming franchises such as Call of Duty, World of Warcraft and Candy Crush $95 per share, a 45 per cent premium on its closing price last week.
Besides amassing content that would boost its position against rival Sony, the world’s biggest software company said the Activision deal would serve as a springboard for its move into the metaverse, the name given to the immersive virtual worlds that all the big tech companies are racing to build.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, chair and chief executive of Microsoft.
The move makes Microsoft the world’s third-biggest gaming company in terms of revenues, behind only China’s Tencent and Japan’s Sony, while building on the tech 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 creating online communities around gaming that would eventually reach billions of people. The 400m monthly users of Activision games like Candy Crush, along with the 25m subscribers for Microsoft’s subscription games service Game Pass, would leave the company with “one of the largest and most engaged communities in all of entertainment”,
“We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”
Microsoft pounced with Activision’s shares down almost 30 per cent since a lawsuit was filed against the company in July, alleging widespread sexual harassment and gender pay issues at the company.
The acquisition also bolsters 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 line-ups of gaming content in the industry.
Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.
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.
