Microsoft’s (NASDAQ:MSFT) Activision Blizzard acquisition has meant high short-term costs, but due to Microsoft’s liquidity, it has had a minimal effect on its balance sheet. As such, the net long-term benefit for Microsoft as a result of the deal reiterates my Buy investment case for MSFT shares at this time, even considering valuation and company risks specific to Activision Blizzard.
Activision Blizzard Acquisition
Microsoft first announced its intent to acquire Activision Blizzard in January 2022 for $95 per share in an all-cash transaction. The value of the acquisition was expected at $68.7 billion including Activision Blizzard’s net cash.
Concerns were raised by the UK’s Competition and Markets Authority due to the impact of the acquisition on cloud game streaming. Therefore, Microsoft restructured the deal. It transferred the streaming rights for all Activision Blizzard games released over the next 15 years to Ubisoft (OTCPK:UBSFY).
Microsoft officially acquired Activision Blizzard in October 2023 for $75.4 billion, and it incorporated it into its gaming sector. The move brought international bestsellers like Call of Duty, World of Warcraft, and Candy Crush Saga into Microsoft’s portfolio.
Microsoft announced 1,900 layoffs within its Activision Blizzard and Xbox divisions in January 2024, around 8.6% of its gaming sector employees. The intent is to streamline operations after the acquisition. Following the deal, Blizzard’s president at the time, Mike Ybarra, also stepped down.
Bobby Kotick, the former CEO of Activision Blizzard, left the company officially in December 2023. Bobby Kotick wrote a letter of appreciation and expressed his sincere positive outlook on Activision Blizzard’s future under Microsoft’s leadership.
Strategy & Market Considerations
Notably, in 2024, Activision Blizzard is set to launch The War Within, which will be its first installment in The Worldsoul Saga series for World of Warcraft. These are…
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