'Deal of the Century' Microsoft Acquires Activision Blizzard for 82 Trillion Won

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Microsoft (MS) is acquiring game developer Activision Blizzard (Blizzard) for approximately $68.7 billion (about 82 trillion won). This is the largest merger and acquisition (M&A) in the ICT industry. With this M&A, MS will emerge as the world's third-largest gaming company, following China's Tencent and Japan's Sony.

Local media including The Wall Street Journal (WSJ) reported on the 18th (local time) that MS will acquire Blizzard for about $67.8 billion in an all-cash deal. Blizzard, headquartered in Santa Monica, California, is the developer of popular games such as Candy Crush, World of Warcraft, Call of Duty, and Overwatch.

This mega M&A far surpasses Nvidia's ARM acquisition (40 billion dollars), which was hailed as the 'deal of the century.' It is also the largest in MS's history. Previously, MS acquired LinkedIn in 2016 for a record $26.2 billion.

MS issued an official statement on the day, saying, "Gaming is the largest and fastest-growing form of entertainment, and Blizzard is a leader in game development and interactive entertainment content," confirming that "upon completion of the acquisition, (MS) will become the third-largest gaming company by revenue, following Tencent and Sony."

Accordingly, MS is expected to accelerate growth in gaming across mobile, PC, console, and cloud platforms, while also fully launching its 'metaverse' business, which has rapidly risen amid the pandemic. In particular, there are expectations that MS will focus on developing a metaverse platform linked to gaming, similar to Facebook, which changed its name to Meta. It is reported that the two sides began acquisition negotiations at the end of last year.

Satya Nadella, MS Chairman and CEO, emphasized, "Gaming is today’s most dynamic and exciting entertainment sector," adding, "(This acquisition) will play a key role in developing the metaverse platform."

MS is reported to have purchased Blizzard shares at $95 per share. This price includes a 45% premium over Blizzard's last Friday stock price on Nasdaq. Immediately after the M&A news broke, Blizzard's stock price surged more than 30% on the New York Stock Exchange, while MS's stock fell slightly.

However, local media also speculate that U.S. regulatory authorities, concerned about big tech's market dominance, may not easily approve MS's acquisition of Blizzard. Additionally, critical views have been raised regarding MS's move to acquire Blizzard amid ongoing lawsuits and investigations related to workplace sexual harassment scandals at Blizzard. Bobby Kotick, Blizzard's CEO, who is under pressure to resign for failing to take action despite employees' sexual harassment complaints, is expected to remain in his CEO position for the time being after the acquisition.