Satya Nadella led Microsoft’s acquisition of Activision Blizzard, breaking all kinds of records, even for a company that hasn’t shied away from massive deals in recent years.
Satya Nadella led Microsoft Corp.’s planned acquisition of Activision Blizzard Inc. breaks all kinds of records, even for a company that has not shied away from big deals in recent years. The US tech giant announced Tuesday it will pay nearly $69 billion to acquire Activision, owner of the Call of Duty franchise. That’s roughly equivalent to the amount Microsoft has set aside for its five largest past acquisitions combined, including the $26 billion deal with LinkedIn Corp. in 2016.
Last year, Microsoft also offered $19.6 billion to buy speech technology company Nuance Communications Inc. after a $7.5 billion deal for video game maker Zenimax Media Inc. the purchase of GitHub Inc. for $7.5 billion in 2018.
Buying Activision will eat up much of Microsoft’s cash pile, which stood at $131 billion at the end of September, although the spending represents only a fraction of its current market value of $2.3 trillion. Few companies have the balance sheet to close such a deal.
Microsoft’s Acquisition of Activision to Pass Antitrust Test
(AFP) Microsoft’s $69 billion deal to buy video game powerhouse Activision Blizzard is expected to win over regulators, despite vows in Europe and the United States to rein in tech titans.
Analysts interviewed by AFP after the merger plan was announced Tuesday said the deal would certainly be investigated, but likely less intensively than a takeover by Amazon, Google or Facebook parent Meta.
“From a regulatory perspective, Microsoft is not under the same level of scrutiny as other tech stalwarts,” said Wedbush analyst Dan Ives.
Satya Nadella, CEO of Microsoft, “saw a window to make a big gamble on consumers while others are in the regulatory spotlight and unable to go after an asset like this,” added Ives. .
The analyst noted that there will certainly be “speed bumps on both the Ringway and Brussels” given the epic size of the deal.
Microsoft catapulted itself into the big league in one of the world’s most lucrative markets by announcing the deal to acquire Activision-Blizzard – the largest acquisition in the history of the video game industry.
The deal will bring some of the world’s most famous games into Microsoft’s possession, including “Call of Duty”, “Candy Crush” and “Warcraft”, and will make it the third largest gaming company in the world, behind Sony and Tencent. only.
Not jumping to the top spot in the market should be to Microsoft’s advantage when it comes to regulators concerned about the potential for monopoly.
However, there are concerns that Microsoft would make future Activision titles exclusive to its Xbox consoles and Windows computers, excluding rival PlayStation hardware from Japan-based Sony.
Activision has long made blockbuster games like “Call of Duty” for both consoles.
“While some have argued that this would be against its own interests and curtail its revenue stream, this would not be unusual, as Microsoft has gotten itself into trouble by bundling hardware and software before,” said Michael Hewson, chief market analyst for CMC Markets. .
– US vs. China? –
Regulators could even see value in challenging China-based heavyweight Tencent in the video game industry, analysts said.
“While the acquisition is big, Microsoft won’t be the biggest gaming company, so it’s hard to talk about monopolistic behavior,” said Carolina Milanesi, chief analyst at Creative Strategies, of how regulators might view the merger.
“There could also be a US-China contest here in Microsoft’s favor given how big Tencent is.”
Microsoft merging game, cloud computing and software as part of a push into the metaverse would also make it a rival to Meta, which the company renamed from Facebook in tribute to such immersive, virtual worlds that are the future.
“Microsoft is a formidable competition to Meta, Epic Games, Tencent and Roblox, all of which are seeking dominance in this emerging theme,” said GlobalData chief analyst Rupantar Guha.
“While the metaverse is still largely conceptual, Microsoft’s strength in underlying themes such as artificial intelligence, augmented reality, virtual reality and cloud computing gives it a leadership position in this theme.”
Niko Partners senior analyst Daniel Ahmad was among those confident that the video game industry will continue to consolidate after a record year of takeover deals in 2021.
“You have to wonder what Tencent is going to do next,” Ahmad said.