Microsoft-Activision set $69 billion record
Satya Naidella, Chief Executive Officer of Microsoft.
Charles Pertwee – Bloomberg | Bloomberg | Getty Images
MicrosoftIn 2008, the then-CEO attempted to establish a new record. Steve BallmerYahoo was a target of our plans for acquisition. $50 billion. This would have made it the largest U.S. technology deal, surpassing JDS Uniphase. $41 billion purchaseSDL was established in 2000.
Satya NadellaMicrosoft is trying to get back in the record books of deals.
Microsoft stated Tuesday it was buying the video game publisher. Activision BlizzardThe deal was valued at almost $69 million, which would make it the most expensive U.S.-related tech transaction in American history. 2016 Dell purchased EMCFor $67 billion Next is the JDS-SDL agreement. IBM’sPurchase of 34% billion Red HatThis was the closing date for.
Activision shareholders must approve Microsoft, and regulators have to give their approval. Two recent mega-deals in the semiconductor industry — Nvidia’sBuy Arm and AMD’sContract for purchase Xilinx — have both been held up in regulatory reviewMore than one year.
Microsoft’s purchase price for the company is nearly twice what it has paid in the past 47 years. Microsoft’s last acquisition was LinkedIn in 2016It cost $26 trillion.
Nadella is the one who redeemed them. succeeded BallmerIn 2014, Microsoft CEO is able to use capital and has an investor base who encourages him to go aggressive.
Microsoft had a market value of $400 billion when the LinkedIn announcement was made. The purchase would have accounted for 6.5% of that company’s total market cap. Microsoft had a market value of $260 billion at the time it attempted to purchase Yahoo. This would mean that Microsoft would be giving up just 20%.
Microsoft currently has an estimated valuation of $2.3 trillion, and Activision is paid just 3%.
Microsoft instead of paying Activision stockholders in stock, it is paying them cash. Although it’s quite a heavy load, Microsoft is able to afford it. At the time of this writing Sept. 30The company had $130 billion cash equivalents. 85% of this was in short-term investments.
Microsoft purchased Activision for a whopping 45% more than its closing price Friday. However, Microsoft shareholders seem to be happy with the purchase price. The stock fell just 2.4% on Tuesday — in line with many other tech stocks in an overall down day for the market.
It’s partially due to Nadella’s success with previous acquisitions like LinkedIn. GitHubMicrosoft purchased the company for $7.5 million in 2018, and it was renamed Xerox. This is more an expression of Microsoft’s excitement about gaming and the potential for it to expand beyond its Xbox and existing subscription services called Microsoft Xbox. Game Pass.
Piper Sandler analyst Piper Sandler wrote in a note that they recommend the purchase of the shares. “The $68.7B all-cash deal to acquire ATVI represents the most significant acquisition in Microsoft’s history, but it also brings attractive strategic values, especially within the consumer tech sector where Microsoft holds a smaller product range,” the analysts. Microsoft’s longer-term share growth potential is $1 trillion if advertising and gambling are combined.
Microsoft has also taken advantage of an environment where regulation has been pushing Big Tech, but has mostly let Microsoft be. Google’s executives, Apple, FacebookAnd AmazonRecent years have seen the wrath of elected officialsThese people are worried about how advertising, commerce and data consolidation in too few hands.
Microsoft has been a major player in the megacap market, even though they have been limited to smaller acquisitions in tangential areas.
Dan Ives of Wedbush Securities wrote in a report that MSFT does not face the same scrutiny from regulators as tech stalwarts such as Apple, Facebook, Google, and Amazon. Nadella saw an opportunity to place a large bet on consumers while others were caught up in regulatory scrutiny and couldn’t go after such assets.
A deal this large will still raise eyebrows in Washington, D.C., which will be a test of Microsoft’s continued goodwill.
Activision ended Tuesday up 26% at $82.31, 13% lower than the agreement acquisition price. This is a sign investors don’t believe the tie-up will succeed.