Activision Blizzard stock surges 11% after judge allows Microsoft merger

Investing

Activision Blizzard’s stock price jumped more than 11% on Tuesday, after a federal judge paved the way for Microsoft to acquire the video game giant despite a federal lawsuit alleging the merger would stifle competition.
BRAZIL – 2022/02/04: In this photo illustration, Activision Blizzard logo is displayed on a smartphone screen with a Microsoft Corporation logo in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
Key Takeaways
  • Activision Blizzard started the morning at just under $83 a share, before surging to $92.06 as of 1:15 p.m., roughly two hours after federal Judge Jacqueline Scott Corley turned down the Federal Trade Commission’s request to temporarily block the Microsoft-Activision merger on antitrust grounds.
  • That’s a two-year high for the stock, which last saw that price in July 2021.
  • Microsoft’s stock price hasn’t had the same spike, starting the day around $332 a share before dipping to around $327 around 10 a.m. and then returning $332.
Contra

At just over $92 per share, Activision Blizzard is still trading below the $95 per share that Microsoft offered to acquire the company—suggesting some investors are uncertain about whether the deal will go through. The FTC could appeal the judge’s ruling or continue its court fight, and Microsoft is still negotiating with U.K. regulators, which also blocked the Activision purchase.

Key Background

Microsoft announced its plan to purchase Activision Blizzard, the makers of Call of Duty, Candy Crush and World of Warcraft, for $69 billion in January 2022. The deal would make Microsoft—which sells the XBox—the world’s third largest video game company after Tencent and Sony, the company said. The deal was criticized by competitors like Sony, which was upset the merger would likely mean Activision Blizzard games will soon no longer be made for its PlayStation. Outside of the U.S., Microsoft and Activision Blizzard received regulatory permission for their merger from the European Commission in May, and struck a deal Tuesday with the U.K. Competition and Markets Authority to pause a separate legal battle there.

Tangent

In order to convince regulators this merger wouldn’t hurt competition in the video game industry, Microsoft made a few concessions. Most notably, it agreed to a 10-year deal to keep Call of Duty releases available on PlayStation and introduce the series to the Nintendo Switch. This agreement was specifically cited by the judge in her ruling as a reason to allow the deal to go through.

Forbes Valuation

We estimate Microsoft founder Bill Gates’ net worth to be $118 billion, while former CEO Steve Ballmer’s net worth stands at $101.4 billion.

This article was first published on forbes.com and all figures are in USD.

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