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Microsoft to buy video game maker Activision Blizzard for $75 billion Microsoft has agreed to pay $75 billion for video game publisher Activision Blizzard, its biggest acquisition ever.
Under the terms of the deal, Microsoft will pay Call of Duty and World of Warcraft shareholders $95 per share, a 45 percent premium to last week's closing price.
Microsoft and Activision Blizzard Games deal
The $75bn acquisition price includes $6.37bn of Activision's net cash, valuing the company at $68.7bn. This is the latest in a wave of deals in the gaming business.
After weeks of negotiations, Take-Two Interactive, makers of the blockbuster Grand Theft Auto game series, agreed to buy FarmVille and Words with Friends maker Zynga for $12.7 billion last week.
In the latest battle for supremacy in digital entertainment, the video game industry has taken center stage. According to Microsoft, the Activision deal will trigger its move to the “metaverse”, a term for immersive virtual worlds developed by major technology companies.
"Games are the most dynamic and exciting category in entertainment across all platforms today and will play an important role in the development of the platform metaverse," said Satya Nadella, chairman and chief executive officer of Microsoft.
Microsoft's Activision Deal Biggest Gaming Deal
The move is Nadella's biggest investment since taking over as chairman in 2014. Microsoft is the world's biggest software business but the Activision deal will make it the third biggest game company in terms of sales, behind only China's Tencent and Japan's Sony.
The combined internet reach of Activision and Microsoft, according to Nadella, will give the new company an advantage in building a gaming community that will eventually reach billions of people.
Activision's 400 million monthly users of games like Candy Crush, along with 25 million subscribers to Microsoft's Game Pass subscription game program, will give the company "one of the largest and most engaged communities in all of entertainment", he claims.
The announcement pushed shares of other top video game companies significantly higher on the outlook for future transactions in the industry. Electronic Arts, whose games include sports brands FIFA and Madden, jumped more than 5 percent, while Ubisoft, maker of Assassin's Creed, gained 8 percent.
In response to a complaint filed against Activision in July claiming rampant sexual harassment and unequal pay for men and women, Microsoft pounced.
As Microsoft's stock skyrocketed during Nadella's presidency, documents show that he had accumulated positions worth around $255 million even after he sold about half his shares in late November, earning $285 million.
According to Microsoft's suggested acquisition price of $370 million, CEO Bobby Kotick of Activision Blizzard holds shares in the game company worth over $370 million.
Several investors expressed displeasure in June over Kotick's proposed 2020 salary of $ 155 million, making him one of the highest-paid CEOs in the United States. Is microsoft stock a buy or sell before future earnings?