Produced | Sohu Technology
Author | Liang Changjun
On January 20, Microsoft’s nearly $70 billion acquisition broke out and terminated the contract. Activision Blizzard disclosed on Wednesday the terms of the termination of its $68.7 billion merger agreement with Microsoft, which would require Microsoft to pay up to $3 billion in termination fees.
Activision Blizzard stated that if the merger transaction is terminated, including due to antitrust concerns, and Activision Blizzard does not materially violate any terms of the agreement, Microsoft will pay if the termination notice is provided by January 18, 2023. $2 billion termination fee; if offered after January 18, 2023, but before April 18, 2023, Microsoft will pay a $2.5 billion termination fee; if offered after April 18, 2023, Microsoft will pay Pay a termination fee of $3 billion.
However, if Activision Blizzard terminates the deal by accepting a higher offer from another buyer, Activision Blizzard will pay Microsoft a $2.27 billion termination fee. Activision Blizzard said its board unanimously approved the merger and recommended that shareholders vote for the deal.
On the morning of January 18, local time in the United States, Microsoft announced that it will acquire Activision Blizzard, a game developer and interactive entertainment content publisher, for $95 per share. The total value of the transaction reaches an astonishing $68.7 billion. . After the acquisition, Microsoft will surpass Nintendo to become the world‘s third-largest gaming company by revenue after Tencent and Sony.
The mobile terminal has become the largest market segment in the game industry. Nearly 95% of players in the world like to play games on the mobile terminal. This acquisition is also the largest transaction in history that Microsoft has made for the layout of the Metaverse. Microsoft said in a statement that 3 billion people are currently playing games, immersed in the fun of interactive games, and games have developed into the largest and fastest-growing form of entertainment. The acquisition will accelerate the growth of Microsoft’s gaming business in mobile (mobile phones), PCs, consoles and cloud, and will provide the cornerstone for the “metaverse” business.
Microsoft CEO Nadella once promoted the value of the Metaverse and said that he would enter the Metaverse. In this statement, he said that gaming is the most dynamic and exciting category of entertainment on all platforms today, and will play a key role in the development of the “metaverse” platform. Microsoft is investing heavily in world-class content, communities and cloud services to usher in a new era of gaming that puts players and creators first, with the goal of making games safer, more inclusive and accessible to all.
Microsoft’s planned acquisitions are understood to include Activision, Blizzard and King Studios’ iconic franchises including Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush Saga , as well as a global esports event through Major League Gaming (MLG). The company has studios around the world and employs nearly 10,000 people. After the deal, Microsoft will have 30 in-house game development studios, as well as additional publishing and esports game production capacity.
However, there are also market views that are not optimistic about the deal. Activision Blizzard may have lost top talent and experienced a severe workplace culture crisis that has faced repeated government investigations for failing to protect female employees from sexual harassment and discrimination. Activision Blizzard’s current CEO, Bobby Kotick, will leave after the deal closes, the report said.
Other analysts believe that Microsoft may have overpaid. According to the acquisition price, Microsoft’s valuation premium to Activision Blizzard is 45%, and it is basically paid for half of the cash on the book. At the same time, Activision Blizzard’s performance growth is also under pressure. Its revenue in the third quarter of fiscal 2021 was $2.070 billion, and its net profit was $639 million, an increase of only 6% compared with $604 million in the same period last year.
In addition, in the context of the US government’s strengthening of antitrust, this huge transaction may face strict supervision. The U.S. Federal Trade Commission is reportedly investigating Meta Platforms Inc.’s virtual reality unit Oculus for anticompetitive practices, including the acquisition of multiple VR apps. The market view is that Microsoft’s acquisition of Activision Blizzard is likely to be closely watched and investigated by antitrust enforcement agencies in the United States and overseas.
The Justice Department and the Federal Trade Commission have yet to comment on Microsoft’s planned acquisition, but they have pledged to scrutinize the tech industry consolidation more closely and have launched a joint process to overhaul the approval process. In addition to the resistance, Microsoft’s own timeline will stretch for a long time, and it plans to close the deal in fiscal 2023.
Some lawyers said that the acquisition of Microsoft is a content distributor’s acquisition of a content producer, and it is a vertical integration. Although a transaction of this scale has never been seen before, the United States is generally reluctant to apply restrictive antitrust principles to vertical transactions. middle. But given that Microsoft (Xbox) is also a game developer, the deal could also be seen as a horizontal acquisition, a merger of two direct competitors, and would face antitrust scrutiny.
Elevation analyst Betty Chan said that Microsoft’s acquisition of Activision Blizzard will undoubtedly be closely scrutinized horizontally and vertically by global antitrust regulators, because the combined company will become the world‘s third-largest gaming company in terms of revenue. Antitrust scrutiny could focus on the combination of Activision Blizzard’s broad, leading gaming portfolio with Microsoft’s consoles and hardware systems, he wrote in a report. The analyst expects the deal will require approvals from the U.S., European Union and China.Return to Sohu, see more
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