Microsoft to acquire gaming giant Activision Blizzard in $68.7 billion deal
The company believes its largest deal ever will speed up the growth in Microsoft's gaming business across mobile
Microsoft on Tuesday announced plans to acquire Activision Blizzard, the publisher of Call of Duty and the World of Warcraft, in a $68.7 billion (about £50.5 billion) all-cash deal.
The price means that the software giant will pay $95 (about £69.8) per share for Activision, representing a premium of 45 per cent to Activision's Friday close.
This is the biggest deal in the history of the gaming industry and the largest ever for Microsoft, far in excess of the $26.2 billion (about £19 billion) Redmond paid to acquire professional networking service LinkedIn in 2016.
The deal will give Microsoft control of popular gaming franchises including Call of Duty, Overwatch and Warcraft.
Once the deal closes, Microsoft says it will be the "third-largest gaming company by revenue, behind Tencent and Sony".
Activision CEO Bobby Kotick will continue to lead the company during the transition.
After the transaction is complete, Activision as a company will report to Microsoft's Xbox chief Phil Spencer.
Microsoft expects to close the transaction in its fiscal 2023. However, US regulators have indicated that they would be significantly more active in scrutinising large acquisitions, particularly in the tech sector, so there is a chance that the deal will be killed during government assessment.
The announcement comes as major American tech giants stake their claims on "metaverse," the virtual online worlds where people can play, socialised and work.
Such virtual worlds are currently dominated by gaming, but the aim is that they expand to serve other demographics and eventually replace much of the traditional social networking activity online.
"Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms," Microsoft CEO Satya Nadella said.
Over the last several years, Microsoft has become more active in its gaming efforts.
In 2014, it acquired Minecraft developer Mojang in a $2.5 billion (about £1.8 billion) deal, and last year it bought game developer Bethesda for $7.5 billion (about £5.5 billion).
Microsoft says the Activision acquisition will help it grow its gaming business across PCs, mobile and consoles, as well as provide the building blocks for the metaverse.
Once the acquisition is finalised, the company will likely add many of Activision's games to Xbox Game Pass.
Microsoft's deal comes after months of sexual harassment allegations against Activision management.
The company was sued by the California Department of Fair Employment and Housing in July for encouraging a culture of continual sexual harassment.
Employees have been pressuring Kotick, who has managed the company for three decades, to resign in the wake of ongoing litigation and allegations.
Commenting on the Activision deal, CEO of Microsoft Gaming Phil Spencer said that Microsoft, as a company, is committed to its journey for inclusion in every aspect of gaming, among both employees and players.
"We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment."
He added: "We're looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard."