Shares of Activision Blizzard Inc (NASDAQ: ATVI) jumped 30% in premarket trading on Tuesday after Microsoft Corp (NASDAQ: MSFT) said it will buy the video game giant for $68.7 billion in cash.
Microsoft is paying $95 a share for Activision Blizzard
The acquisition will help Microsoft further expand its footprint in gaming, as popular titles, including Diablo, Call of Duty, Warcraft, Overwatch, and Candy Crush, are added to its portfolio. The deal that translates to $95 a share for Activision stockholders is scheduled to complete in fiscal 2023.
Microsoft has been focusing more on gaming in recent years as part of its strategy to position itself as a beneficiary of the metaverse. In the press release, CEO Satya Nadella said:
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.
Last year, the American multinational acquired Bethesda for $7.5 billion. MSFT is down nearly 2.0% this morning.
Microsoft to become the third-largest gaming company
The $68.7 billion bid is the largest that Microsoft has ever made for an acquisition. Upon completion of the transaction, the tech titan will become the world’s 3rd largest gaming company by revenue after Tencent and Sony.
The press release on Tuesday also confirmed that Bobby Kotick is expected to keep his role as the CEO of Activision Blizzard and will report to Phil Spencer – the chief executive of Microsoft’s gaming business.
Kotick and his management team has been under fierce criticism in recent months on reports of sexual misconduct within the company. A day earlier, Activision fired dozens of executives after an investigation found them involved in harassment.
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