Markets

Microsoft Acquires Videogame Maker for $68.7 Billion, Its Largest Deal Ever

On Tuesday 18th of January, Microsoft announced that it was set to buy Activision, which makes the popular game franchises “Call of Duty” in a $68.7billion all-cash deal. In response to this news, shares of Activision Blizzard(NASDAQ: ATVI) jumped over 38% on Tuesday on the Nasdaq Stock Exchange, implying that Microsoft will pay a premium of more than 45 percent on the company’s stock, which closed at $65.39 on Friday, just before the Martin Luther King Jr holiday, yesterday. If successful, the deal would be Microsoft’s largest acquisition to date, after it purchased LinkedIn in 2016 for $26.2 billion.

Recently, Microsoft has gotten more aggressive with gaming after purchasing the Minecraft maker, Mojang for $2.5 billion in 2014 and Bethesda, a game maker in a $7.5 billion acquisition deal. The deal, if successful will accelerate the growth of Microsoft’s gaming business by providing Microsoft Xbox console with a vast variety of popular games, such as Warcraft, Diablo and Candy Crush. Once the deal is finalised, analysts expect Microsoft to become the world’s largest third gaming company by revenue, after Tencent and Sony.

Also Read: Microsoft partners AfDB to Train Nigerians for 9 Million Digital Economy Jobs

The deal also aligns with Microsoft’s long-term strategy as it competes with Meta (formerly Facebook) to develop technology for a virtual world called Metaverse, which is currently dominated by gaming but expected to expand to other demographics and eventually replace much of traditional social networking activity online. Satya Nadella, Microsoft’s CEO, noted that Metaverse creates opportunities for software developers to develop a variety of virtual worlds in the future, rather than one firm like Facebook dominating the space.

Since the pandemic, demand for gaming has surged as lockdown measures and social separation orders stimulated  interest in video games as a way to pass time. Analysts estimate that 3 billion individuals play video games around the world as a way of helping them maintain a sense of community and belonging.

Microsoft said it expects the acquisition deal to be completed in 2023. However, there are fears that the deal may be frustrated by government review as US regulators have become more aggressive in scrutinizing tech sector acquisitions.

Yunus Ibrahim

Yunus advocates for mission-driven, underrepresented founders, particularly women, first-generation entrepreneurs, and people of colour. With over 3 years of experience in Venture Capital, ESG, Corporate Finance, and Research, Yunus has gained insights into various markets in Sub-Saharan Africa and worked with diverse founders to build the prosperous African continent we all desire. He received a bachelor's degree in Accounting from the University of Lagos; and was 1 of 60 African scholars selected to study Technology, Entrepreneurship, and Design at the Nigerian University of Technology and Management (NUTM) on a full-ride scholarship.

Related Articles

Back to top button
Arbiterz

Subscribe to our newsletter!

newsletter

Stay up to date with our latest news and articles.
We promise not to spam you!

You have successfully subscribed to our newsletter

There was an error while trying to send your request. Please try again.

Arbiterz will use the information you provide on this form to be in touch with you and to provide updates and marketing.