Microsoft has announced their plans to purchase Activision Blizzard in an all-cash deal with the company worth $26.00 billion USD, which is expected to be finalized by June 10th 2018. The acquisition comes as a significant step for Microsoft’s future and games industry projections say that it will see increased competition among major game developers like EA and Bethesda.
Microsoft announced that they will be buying Activision Blizzard in all. The purchase is expected to close next year, and it is unknown what the future of Activision Blizzard will be. Read more in detail here: microsoft buys activision blizzard what does it mean .
If finalized, the merger would significantly increase Microsoft’s already massive videogame company, adding a portfolio of popular gaming titles such as Call of Duty World of Warcraft and Candy Crush to the Xbox console business and Microsoft’s own games such as Minecraft and Doom. After China’s Tencent Holdings Ltd. and Japan’s Sony Group Corp., Microsoft said the deal would make it the world’s third-largest gaming firm by revenue.
After accounting for Activision’s net cash, Microsoft estimates the transaction to be worth $68.7 billion.
An purchase would also be Microsoft Chief Executive Officer Satya Nadella’s latest and largest attempt to transform the corporation via a series of mergers that have helped the world’s second-highest-valued company become a powerhouse in corporate computers and a burgeoning titan in videogames.
There are also a lot of snags in the agreement. Since California authorities launched a complaint against the firm in July claiming sexual harassment and wage inequity among the company’s approximately 10,000 workers, Activision’s stock has dropped about 30%.
Activision’s stock soared in premarket trade Tuesday after The Wall Street Journal claimed that the business was close to a deal with Microsoft. The stock closed the day at $82.31, up 26%. In the midst of a larger market selloff, Microsoft shares slid 2.4 percent to $302.65 on Tuesday.
According to those familiar with the talks, Activision’s veteran CEO Bobby Kotick is anticipated to retire once the acquisition complete. Mr. Kotick “will continue to serve as CEO of Activision Blizzard,” according to Microsoft’s statement Tuesday, and “the Activision Blizzard company will report to Microsoft gaming executive Phil Spencer” when the transaction complete. However, the firms have agreed that he would leave after the sale is completed, according to the sources.
Mr. Kotick did not precisely address his future plans when the transaction closes in a Tuesday interview, but he did say that he has informed Microsoft that he would “always be available to guarantee that we have the absolute greatest integration.”
Shareholders, business partners, and others have been putting a lot of pressure on Activision Blizzard over claims of workplace misbehavior.
Bing Guan/Bloomberg News photo
Activision, Mr. Kotick, and the company’s board of directors have been under strong pressure from shareholders, business partners, and others since the California lawsuit. Following a Wall Street Journal investigation into Activision’s handling of workplace issues in November, nearly a fifth of the company’s employees signed a petition calling for Mr. Kotick to resign, and Microsoft CEO Steve Ballmer told Microsoft employees that the company was reviewing its relationship with Activision.
According to sources familiar with the situation, Microsoft contacted Activision about a merger in November, after the Journal’s piece. A Microsoft spokeswoman refused to comment on the acquisition’s timeliness. An Activision spokeswoman did not reply to a request for comment right away.
In recent months, Activision has announced a number of changes, including a zero-tolerance harassment policy and the elimination of mandatory arbitration for harassment and discrimination claims, all of which Mr. Kotick claims are aimed at making the company a more welcoming and inclusive Place to Work
During an interview at the WSJ’s Women In: The Tech Industry event, Ms. Wu, who was a subject of the GamerGate controversy, said Activision Blizzard’s CEO created a culture of non-accountability.
The Wall Street Journal reported on Monday that Activision has fired or penalized more than 80 workers since July in response to claims of harassment and other misbehavior.
Mr. Spencer said of Activision’s attempts to address workplace concerns, “We see the progress that they’re doing that was really key to us choosing to move ahead here.”
The agreement comes on the heels of a surge in the gaming industry during the epidemic. It also comes at a time when Microsoft and other Technology behemoths are jockeying for position in the face of major shifts in the industry, such as a shift toward cloud-based gaming and the rise of the metaverse, a virtual world where people can play, work, and shop using digital avatars across multiple platforms.
Microsoft has exhibited a voracious appetite for acquisitions under Mr. Nadella’s leadership, but Activision is more than double the size of its last largest transaction. In 2016, Microsoft spent more than $26 billion for professional social network LinkedIn Corp., propelling the company into the Social Media space.
Microsoft paid $16 billion for artificial intelligence startup Nuance Communications Inc. last year, its second-largest purchase at the time, to help speed expansion in the healthcare business.
According to experts, Microsoft has been successful in completing these major purchases because it keeps its hands off new companies and gives assistance in the form of more financing and Technology, such as Microsoft’s Azure cloud. LinkedIn’s yearly sales reached $10 billion for the first time in July, according to Microsoft.
Microsoft has had numerous transaction failures, most notably in its attempt to purchase pieces of the short-video app TikTok from Chinese parent firm ByteDance Ltd in 2020, which was unsuccessful. TikTok was threatened with a ban in the United States by then-President Donald Trump citing national-security concerns at the time.
Microsoft also attempted but failed to acquire the social networking site Pinterest and the messaging startup Discord Inc.
After those acquisitions fell through, Microsoft opted to double down on its gaming goals, according to a source familiar with the company’s strategy.
Mr. Nadella has spent more than $10 billion acquiring more than a dozen gaming studios since taking over as CEO in 2014, including the businesses behind the Doom series and Minecraft.
Mr. Spencer, Microsoft’s gaming boss, said in October at the Journal’s WSJ Tech Live conference that the firm was not slowing down on its game acquisition binge. “We’re never done searching for individuals and teams that we believe would be a good fit for our approach,” Mr. Spencer said.
Microsoft’s gaming strategy is increasingly centered on building its subscription service, known as Game Pass which allows players to access a portfolio of titles for a monthly charge. Mr. Nadella has compared the Game Pass concept to “Netflix for games” in the before. Early last year, Microsoft revealed that Game Pass had 18 million customers. Microsoft said on Tuesday that it already has 25 million users, thanks to the Activision announcement.
The agreement would enhance Microsoft’s Game Pass portfolio, with ambitions to introduce Activision titles to the subscription service, the company announced on Tuesday. Microsoft said that it will undertake 30 internal game development studies with Activision. According to Microsoft, both firms’ boards of directors have accepted the deal, which is slated to finalize in July 2023.
Microsoft’s gaming income would be cut in half if it bought Activision. According to FactSet, analysts anticipate Activision’s revenues in 2021 to be $8.7 billion, whereas Microsoft earned $15.4 billion in gaming revenue for the fiscal year through June, accounting for nearly 9% of its entire income.
The stock of Activision had been increasing in tandem with the videogame industry’s meteoric rise until the California Department of Fair Employment and Housing filed a complaint in July alleging gender pay discrepancy and sexual harassment at the firm. The charges made by the government have been refuted by Activision.
According to the Wall Street Journal the corporation has also been under investigation by the Securities and Exchange Commission, with a particular emphasis on Mr. Kotick, who was subpoenaed separately along with other top employees. Activision has said that company is working with the Securities and Exchange Commission.
In September, Activision announced that company had agreed to pay $18 million to resolve a two-year investigation into sexual harassment allegations by the Equal Employment Opportunity Commission. The agreement is subject to judicial approval.
Mr. Kotick failed to alert the board about sexual-misconduct charges that he was aware of, including rape, against managers throughout the corporation, according to a November Journal investigation that referenced interviews and internal records. It also highlighted charges of wrongdoing against Mr. Kotick, such as when an assistant claimed in 2006 that he threatened to murder her in a voice message.
Activision claims that the Journal’s coverage of the corporation and its CEO was inaccurate. Mr. Kotick has said that he was open and honest with his board, which published a statement in his support. Mr. Kotick would not have been told of every accusation of wrongdoing, according to an Activision representative, and Mr. Kotick regrets the alleged incident with his assistant.
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According to a Monday story in the Wall Street Journal Activision has received 700 complaints of employee concern about misbehavior and other concerns since July. According to the Journal, which cited individuals familiar with the incident, a summary of the company’s personnel concerns was written before the December holidays, but Mr. Kotick withheld it because he believed it would exaggerate the company’s working problems.
Employee comments include remarks on social media and vary from mild workplace issues to “a tiny number” of potentially serious accusations, which the business reviewed, according to an Activision representative. “The accusation involving Mr. Kotick is false,” she stated.
Microsoft has come under fire from shareholders for how it handled sexual harassment complaints among its employees. Last week, the company announced that it would be more open about the issue, with its board of directors reviewing its sexual harassment and gender discrimination policies and releasing a summary of the findings of previous investigations into how the company handled allegations against company executives, including co-founder Bill Gates.
According to the Wall Street Journal, Microsoft board members launched an inquiry into Mr. Gates’ previous intimate engagement with a female colleague in 2019. Mr. Gates resigned from the board of directors in 2020. A spokesperson for Mr. Gates told the Journal that the affair had ended peacefully about 20 years ago and that his decision to quit the board had nothing to do with the probe.
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Microsoft has announced that they will be buying Activision Blizzard for $26.6 billion. This is the largest acquisition in Microsoft’s history. Reference: microsoft buying blizzard .
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