NEW YORK (Agefi-Dow Jones)–Microsoft on Tuesday announced the biggest acquisition in its history with an agreement to buy “Call of Duty” publisher Activision Blizzard for $68.7 billion to create a global video game giant.
The operation will allow Microsoft to create the third game publisher in the world in terms of turnover, behind Tencent and Sony, and to get its hands on games such as “Warcraft”, “Diablo”, “Overwatch” , “Call of Duty” and “Candy Crush,” in addition to global esports operations through professional video game league Major League Gaming, the two companies said in a joint statement.
Microsoft is offering a price of $95 per share, payable entirely in cash, for each Activision Blizzard share. The offer values Activision Blizzard at $68.7 billion including net cash, Microsoft said.
The acquisition is expected to be completed during the 2022-2023 financial year, ending at the end of June, and will be accretive to adjusted earnings per share at the closing of the transaction, the group said.
Activision Blizzard shares jumped 26.9% to $83 as the New York Stock Exchange approached mid-session. The title Microsoft yielded 1.4%, to 306 dollars.
Cloud and Metaverse
Activision stock peaked at more than $104 last year, but has since lost nearly a third of its value after workplace harassment and discrimination scandals hit the group and sparked suspicion from some investors and business partners. The game publisher has been the subject since July of lawsuits from a California state agency for alleged acts of sexual harassment and wage discrimination between men and women.
Much criticized for his management of the crisis, Bobby Kotick, who has led the group for nearly 30 years, will remain general manager of Activision after the merger. It will be placed under the direction of the boss of the branch video games of Microsoft, Phil Spencer, indicated the two companies.
Following a survey published by the Wall Street Journal in November on the management of these issues by the group, nearly 20% of Activision’s 10,000 employees had signed a petition calling for the resignation of Bobby Kotick. Activision has announced a series of measures in recent months to make its work environment “more welcoming and inclusive”. A “zero tolerance for harassment” policy has also been adopted.
The video game sector has been marked by numerous mergers in recent months, after having experienced an acceleration in its growth thanks to the pandemic. Last week, Take-Two, the publisher of “Grand Theft Auto”, announced the acquisition of its rival in mobile Zynga for 11 billion dollars.
Microsoft and its competitors are also seeking to strengthen their positions as video games are experiencing major upheavals with cloud platforms and the arrival of universes combining virtuality and reality, such as Facebook’s metaverse, which allow players to play through an avatar.
To establish his strategy, the CEO of Microsoft, Satya Nadella, has favored a policy of acquisitions, spending more than 10 billion dollars to acquire a dozen studios, such as those at the head of the “Doom” and “Minecraft” franchises. The Activision acquisition would be more than twice the $26 billion paid for social network LinkedIn, the group’s biggest deal so far.
Microsoft’s strategy for games essentially involves a subscription model with its Game Pass platform, which allows players to have access to a catalog of titles for a monthly fee. In the past, Satya Nadella compared Game Pass to a “Netflix of games”.
On the occasion of the announcement of the acquisition of Activision, Microsoft indicated Tuesday that Game Pass currently has 25 million subscribers, against 18 million last year.
The takeover of Activision would approximately halve Microsoft’s revenue in the field of video games.
Analysts estimate Activision’s video game revenue to be $8.7 billion in 2021, according to FactSet, while Microsoft’s reached $15.4 billion in its last fiscal year ended in June, which represents about 9% of the software giant’s total revenue.
-Cara Lombardo, Kirsten Grind and Aaron Tilley, The Wall Street Journal (French version Jérôme Batteau, Thomas Varela) ed: LBO
Agefi-Dow Jones The financial newswire
Dow Jones Newswires
January 18, 2022 12:05 ET (17:05 GMT)