Microsoft buys the dip by acquiring Activision

Yesterday, Microsoft acquired Activision for $68.7B — sending its stock up 26%.

What’s the big deal? This is the largest gaming acquisition ever — 5x more than the next largest by Take-Two acquiring Zynga last week for $12.7B.

This may be one of the best outcomes for Activision investors amid sexual harassement lawsuits and employee culture issues plaguing the company — which sent ATVI down 40% in the past year.

Dips are the best time to buy — and Microsoft took the opportunity to scoop up Activision at a bargain.

Post-acquisition, Microsoft will become the third largest gaming company by sales behind Tencent (OTC:TCEHY) and Sony (NYSE:SONY).

Gaming full send: The acquisition is a win-win for both Microsoft and Activision:

• Microsoft can further expand into gaming with Activision’s team of triple-A game developers and one of the most valuable libraries of gaming content.
• Activision’s CEO saw the potential in Microsoft’s tech to help it expand into the metaverse (via CNBC interview).

Microsoft still needs to launch a VR headset — a market dominated by Sony and Oculus’ (Meta) headsets.

Not-done deal: The deal isn’t final and an acquisition of this size could draw attention from the Department of Justice (via TC).

• The question: Is Microsoft developing a gaming monopoly? — especially after its $7.5B acquisition of game developer ZeniMax last year.
• With Activision trading 15% below its $95 per share purchase price, investors are pricing in a possibility the deal doesn’t go through.

Gaming companies are looking cheap — are they ripe to be acquired? 👀