Microsoft
MSFT
announced that it would be acquiring Activision Blizzard
ATVI
earlier this week. The $75 billion all-cash deal (largest acquisition in company history) will competitively position MSFT for the next generation of gaming in the metaverse.
This deal would rank Microsoft as the third-largest gaming enterprise on earth and #1 in the US (by revenue).
Microsoft’s deepening pockets catalyzed a recent spending spree, racking up 14 acquisitions in 2021, along with 8 strategic buy-ups it made in its videogame development.
Microsoft is already involved in the nascent metaverse space with its HoloLens “Mixed-Reality” (MR) headset. This MR device is pioneering the fusion of reality and the virtual realm in a way that’s never been done before.
Microsoft took advantage of deeply discounted ATVI to meaningfully expand its videogame presence following the value-crushing allegations of workplace misconduct at Blizzard.
I see this MSFT purchase of ATVI as a revitalizing value play benefiting both enterprises. The deal solidifies Microsoft’s domestic leadership in gaming and stakes its claim in the nascent metaverse. Activision Blizzard gains the managerial expertise of MSFT’s nearly 50 years of leadership
Names like Call of Duty, World of Warcraft, and Candy Crush will now be a part of Microsoft’s metaverse portfolio of games. ATVI is up over 25% since this announcement (still 15% below deal price), while MSFT exhibited a rare 3% acquirer bid (zealous optimism around synergies).
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