On January 18, Microsoft shook up the video game industry by announcing its intention to buy Activision Blizzard for 68.7 billion dollars. An extraordinary operation, the largest ever carried out by the American company, which will soon be submitted to the competent authorities for approval. And so the outcome of the acquisition should take place by June 2023, the backstage of this agreement is revealed to us today. An agreement that was concluded extremely quickly and at the initiative of Microsoft and Xbox.
An acquisition at the initiative of Microsoft
In a new document produced by Activision Blizzard for the attention of the Securities and Exchange Commission (SEC), we indeed discover the chronology of the exchanges between Activision Blizzard and Microsoft. A particularly long and complete document that allows you to know a certain number of details that were played out in the greatest of secrets. And the first exchanges date back, according to the merger project mentioned, to November 19, 2021.
We are then three days after the publication of the Wall Street Journal survey. The magazine indeed reveals on November 16 that the president of Activision Blizzard was aware of the cases of harassment within his company. Worse, the newspaper specifies that Bobby Kotick was able to carry out various actions to conceal them and even to dismiss certain victims. The case takes on an unprecedented, unexpected scale and the video game giants do not fail to express their rejection of such methods.
After Playstation and Nintendo, it is Phil Spencer who speaks on this subject. The strongman of Xbox then says to himself “deeply troubled” and ensures that the firm “is re-evaluating all aspects of its relationship with Activision Blizzard.” This communication is sent to the teams working with Phil Spencer in an email that leaves on November 18, 2021. The next day, a telephone exchange between Phil Spencer and Bobby Kotick will change everything.
“During an off-topic conversation between Mr. Spencer and Mr. Kotick, Mr. Spencer mentioned that Microsoft wanted to discuss strategic opportunities between Activision Blizzard and Microsoft and asked if it was possible to make an exchange with Mr. Nadella the next day.” can we read in the document. The next day, and after having informed his board of directors, Bobby Kotick therefore exchanges with Satya Nadella, CEO of Microsoft. The latter is then particularly explicit and informs Kotick that “Microsoft is interested in the prospect of a merger with Activision Blizzard”.
This first exchange was thus the founding stone of nearly two months of incessant discussions. Almost daily contacts which enabled the two firms to find a historic agreement presented to the world on January 18th. Above all, this document provides a better understanding of the context in which this acquisition project took place. Between rapidly transformed opportunity and significant competition, the story reveals unsuspected scenes. Like the fact that four other companies were in line for similar projects.
The complete story of Microsoft’s takeover of Activision Blizzard
- November 19, 2021
Telephone conversation between Phil Spencer and Bobby Kotick. Phil Spencer offers an interview the next day with Satya Nadella to discuss strategic opportunities between Microsoft and Activision Blizzard - November 20
Satya Nadella announces Microsoft’s desire to propose acquisition of Activision Bethesda - November 22
Exchange between Phil Spencer, Bobby Kotick and Brian Kelly (chairman of the board of directors of Activision Blizzard). Phil Spencer wants Activision Blizzard’s financial plans. Kotick and Kelly require an initial proposal to be made to the board to continue discussions and share new information. - November 26
New exchange between Phil Spencer, Bobby Kotick and Brian Kelly. Phil Spencer formulates an acquisition at $80 per share. - November 28
After several exchanges and internal discussions, Bobby Kotick informed Phil Spencer that negotiations could only open if Microsoft was ready to make an offer between 90 and 105 dollars per share. Phil Spencer confirms and underlines that the offer will be made on the lower range of this interval. - 1st December
Phil Spencer and Bobby Kotick agree on connecting their legal and financial teams and draft a nondisclosure agreement between the two companies. - December 3
Exceptional meeting of the Activision Blizzard board of directors in the presence of the general management of the group, and various consulting firms. Activision Blizzard then selected the firm Allen & Company to support it in this acquisition operation.
That same day, another company approached Bobby Kotick and Brian Kelly about their interest in strategic deals with Activision Blizzard. A meeting is desired the following week by this “Company A”. - December 6
Activision Blizzard and Microsoft sign nondisclosure agreements. The two companies share new confidential information (including long-term financial projections). Activision Blizzard then has no other agreement in progress for an acquisition but the door remains open to other players in the market.
That same day, Brian Kelly receives a letter from “individual B” for a potential acquisition of the Blizzard division. - December 7
A meeting is organized between various representatives of Activision Blizzard and Microsoft, including Phil Spencer and Bobby Kotick, as well as representatives of consulting firms. This is about long-term opportunities. - December 8
Phil Spencer informs that the acquisition operation has been validated by Microsoft’s board of directors and that an offer in due form will soon be sent to Activision Blizzard. - December 10
Meeting of the Activision Blizzard board of directors and representatives of the consulting firms. Microsoft’s and Company A’s proposals are matched. Although more important, the proposal of company A is not retained for increased regulatory constraints and an operation with a large equity component. Microsoft’s proposal is successful thanks to the proposed cash transaction.
Individual B’s proposal is also rejected.
The different parties are informed in the decisions taken. In a telephone interview on the same day, Phil Spencer informed Bobby Kotick and Brian Kelly that the takeover offer of $90 per share would be sent to them no later than Friday, December 10, 2021. A response is expected before Monday, December 13 December 2021 followed by an exclusive trading period until January 15, 2022. - December 12