Microsoft buys Activision Blizzard

I think they said it was to be done by July 2023, but I don’t have the quote on hand. I might be mistaken.

This is the quote from their PR:

The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close.

Did PlayStation ever get cross-play with Xbox COD? If not, I betcha you’ll see it in COD 2024! :)

Hey, AOL spent more than double that for Time Warner in 2000. $186 Billion in Y2K money. And look how well that worked out!

Definitely false.

Dow Chemical and DuPont was $130 billion in 2015
United Technologies and Raytheon was $121 billion in 2019
Energy Transfer Equity and Energy Transfer Partners was $90 billion in 2018
Heinz and Kraft was $100 billion in 2016
Pfizer and Warner-Lambert was $90 billion in 2000
AT&T and Time Warner was $85 billion in 2016
Exxon and Mobil was $80 billion in 1998
and Verizon bought out Vodafone’s stake in Verizon Wireless for $130 billion in 2014.

Yeah, That’s July 2022 since June is Microsofts 2023 fiscal year.

Edit: I was slightly off, the Fiscal year runs from July 1st to June 30th but July 2022 is still in the 2023 fiscal year for Microsoft.

Were any of those deals all cash? The two I looked up were stock (Dow and DuPont) and a stock + cash deal (ATT Time Warner).

Oh fair enough - I wasn’t paying attention to the “cash” element of the statement I guess. I have no idea if any of them were all-cash deals, but my guess is that very few, if any, were. There aren’t many companies, even the big oil giants, that keep that much cash on hand.

You’re saying the deal will close right at the start of the fiscal year? That would be incredibly quick for a purchase of this size.

I don’t know if I expect it at the beginning of the fiscal year, but they are essentially saying it will close some time between july 2022 and June 2023. It just depends on how many roadblocks get thrown up. Like I said, BEthesda was 6 months from announcement to closing, though that was a smaller deal.

All that matters is that antitrust doesn’t throw roadblocks. If there are no anti-trust concerns then I don’t see why it can’t close in 6 months. If there are then it could be just like Nvidia and ARM.

Wasn’t the main hurdle with Nvidia and Arm China, not US regulators?

Not to my knowledge, it’s mostly a lot of regulators concerned about the power Nvidia holds with ARM against competitors.

The market is definitely expecting trouble. The Activision share price is just $79, a huge gap to the $95 per share that MS is paying. Given the price was $65 before the announcement + the huge breakup fee, it is like the markets are assuming a 50% chance the deal is blocked.

If you think the deal is basically certain to close, then buying those Activision shares should be easy money.

This week the Opening Arguments podcast had an episode that was a deep dive into the legal aspects of the deal, and this aligns with what they were saying:

The $3bn breakup fee is an indication of nervousness around the deal completing, rather than confidence in it. And there’s speculation that a monopoly investigation will more likely happen than not: if you define the relevant market as just “videogames”, it obviously isn’t close to a monopoly, but if you look at the emerging “Netflix-like subscription services for videogames” market, Microsoft is pretty dominant, and this will only bolster that.

I don’t see it, but I’m Joe Nobody without expertise in this area so maybe it does get blocked. Compared to a bunch of other mergers and acquisitions that have sailed through, it just seems odd this one would be where the Feds step in.

I guess you could make the argument that this administration may look less favorably on a deal of this size than the one in charge of such things during Disney’s acquisition of Fox.

My father benefited from this one!

If we go that way, we can look at ‘consoles where fans of japanese games play’ and determine how Sony is totally beating Microsoft!

Who is going to make that argument? Sony? Nintendo? Valve? Their… competitors? All of which are doing better in the video game business than Microsoft?

Microsoft already has Gamepass, they will have it whether or not they add the ActiBlizz library to it.

Yeah, “Microsoft has a monopoly on a service that they invented (for console games) and we haven’t even tried to compete with so you shouldn’t let them buy Activision” is certainly a hot take.

It’d be like blocking Disney’s acquisition of FOX because it gives them too much power in the superhero movie genre. Way too specific.

I suppose you can argue anything you want in court, but that would be difficult to swallow yeah.

Every merger has a breakup fee. The failed AT&T/T-mobile merger had a $4B fee, and that was “only” $39B.