Microsoft has announced a major expansion in the games market with an agreed takeover of Activision Blizzard for USD 68.7 billion cash. The deal will make Microsoft the world's third-largest games publisher by revenue, after Tencent and Sony.
The acquisition takes advantage of a drop in the Activision Blizzard share price in the past year following revelations of sexual misconduct and discrimination, leading to management difficulties at the games publisher. Microsoft will pay USD 95 per share, an almost 50 percent premium on the last traded price before the acquisition was announced but still below the stock's peak of over USD 100 in February 2021.
The takeover strengthens Microsoft's portfolio with titles from the Activision, Blizzard and King studios, including top games Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush and global eSports activities through Major League Gaming. Activision Blizzard has studios around the word with nearly 10,000 employees and almost 400 million monthly active players. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.
Bobby Kotick will continue to serve as CEO of Activision Blizzard, reporting to the head of Microsoft Gaming, Phil Spencer. Kotick and his team will maintain their focus on driving efforts to further strengthen the company's culture and accelerate business growth, Microsoft said.
Microsoft said gaming was the fastest growing form of entertainment and also expected to play a key role in developing the 'metaverse'. Continued growth will be supported by the company's existing content, Xbox community and cloud services.
The takeover also gives Microsoft a stronger foothold in the fast-growing mobile games market, where consolidation is underway already with Take-Two's recent deal to buy Zynga. In addition, Activision Blizzard's games can be added to Microsoft’s Game Pass service, which already counts over 25 million subscribers.
Completion of the takeover still requires regulatory approval. Microsoft expects to close the takeover in its fiscal year 2023, which starts in July.
