(updated with details)
Jan 18 (Reuters) – Microsoft announced on Tuesday that it would buy video game publisher Activision Blizzard for $68.7 billion (59.5 billion euros) in cash, the most expensive deal ever sector.
Once the operation is completed, the American computer giant will become the third largest game company in the world in terms of turnover, behind Tencent and Sony, Microsoft said in its press release.
“Gaming is the fastest growing and most exciting category in entertainment on any platform today and will have a key role in the development of metaverse platforms. [un univers virtuel-NDLR]”said Microsoft Chief Executive Satya Nadella.
Microsoft’s offer of $95 per share represents a 45% premium to Activision’s closing price on Wall Street on Friday.
At 3:40 p.m., Activision gained 28.92% to 83.25 dollars on the New York Stock Exchange.
With the COVID-19 pandemic and the lockdown measures in place, global demand for video games has surged.
By getting its hands on the publisher of the “Call of Duty”, “Overwatch” and “Candy Crush” franchises, Microsoft, manufacturer of Xbox consoles, gives itself a weighty advantage over Sony’s Playstation, which has more regular exclusive games.
Microsoft has made significant investments in video games in recent years, including buying Mojang Studios, the Swedish group behind “Minecraft”, and Zenimax in multi-billion dollar deals.
THE METAVERSE CHALLENGE
After peaking last February, Activision’s stock price tumbled more than 37% largely due to allegations of sexual harassment and abusive behavior within the video game group.
Activision said Monday it had terminated 37 employees and taken disciplinary action against 40 others since July.
Bobby Kotick will continue to serve as Activision Blizzard’s CEO once the group’s takeover is complete.
Last week, Take-Two Interactive Software, another game publisher, announced the acquisition of “FarmVille” creator Zynga in an $11 billion cash and stock deal.
In Europe, Ubisoft accelerated its gains after Microsoft’s announcement and gained 12.22% around 3:40 p.m. GMT while Rovio, CD Projekt, Frontier and Paradox took between 1.93% and 6.67%.
The global games market was valued at $173.70 billion in 2021 and is expected to reach $314.40 billion by 2027, according to Mordor Intelligence.
“Companies like Netflix have already said they’d like to get into video games, but Microsoft made a pretty generous offer,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
Tech companies from Microsoft to Nvidia have bet big on the metaverse, an online universe in which users interact in shared virtual spaces.
Interest around this concept intensified in late 2021 after Facebook rebranded itself as Meta Platforms to reflect its new focus on its virtual reality business.
“Microsoft’s acquisition of Activision marks the beginning of the metaverse race,” said David Wagner, analyst at Aptus Capital Advisors. (Report Subrat Patnaik, Ankur Banerjee and Uday Sampath, French version Tangi Salaün and Laetitia Volga, edited by Nicolas Delame and Sophie Delame)