On Tuesday, tech titan Microsoft announced that it will acquire video game maker Activision Blizzard. The software company will pay a whopping $68.7 billion dollars in an all-cash deal.
Microsoft to Buy Activision Blizzard In An All-Cash Deal Worth $68.7 Billion
The $68.7 billion price tag that comes with the purchase of Activision Blizzard boils down to $95 per share. Investors are now swarming the video game maker’s stock, which closed at $82.31.
Yesterday after gaining 25%. The purchase is Microsoft’s largest acquisition to date. Previously, Microsoft bought out business social media platform LinkedIn for $26.2 billion in 2016.
The Redmond, Washington software company hopes to finalize the deal by 2023. However, US regulators got wind of the planned acquisition. They already expressed interest in scrutinizing the deal closer.
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A zealous government review can recommend nullifying the deal. Or, it can lead to either party opting to back out. Over the past few years, Microsoft is slowly beefing up its video game arsenal.
It bought Minecraft developer Mojang for $2.5 billion in 2014. Last year, the company acquired Bethesda for $7.5 billion.
Activision Blizzard Mired In Controversy
Meanwhile, Activision Blizzard can benefit from a change in ownership after getting mired in controversy over the past few months.
Allegations of sexual misconduct and harassment hounded several executives. Monday, the company said Monday that they fired dozens of executives following an investigation.
Meanwhile, CEO Bobby Kotick, himself under fire for allowing all these things to happen, will remain CEO during the transition.
However, analysts expect him to step down once the deal completes. Once the smoke clears, Microsoft said Activision will report to Xbox head Phil Spencer.
Activision Blizzard Part of Microsoft Strategy for the Metaverse
In addition to additional gaming firepower, Blizzard Activation will also play a role in Microsoft’s metaverse strategy.
Even as Meta (formerly Facebook) dominates headlines on the metaverse, gaming companies dominate present virtual worlds. Microsoft hopes to capitalize on this and expand coverage to include other demographics.
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Microsoft CEO Satya Nadella talked about the acquisition in a call Tuesday. “When we think about our vision for what a metaverse can be, we believe there won’t be a single, centralized metaverse,” he said.
However, Microsoft still lacks the virtual reality consumer hardware that users need to experience virtual worlds.
Meanwhile, Kotick said that Microsoft can help push Activision Blizzard towards the metaverse. He admitted that talks between the two companies started late last year and accelerated rapidly by January.
Watch the CNBC Television video analysis of the Microsoft buyout of Activision Blizzard. Here’s what the Microsoft-Activision deal means for the metaverse:
What do you think about Microsoft’s purchase of Activision Blizzard? Do you find the price tag of $68.7 billion eye-popping?
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