The project may be controversial, but nothing can objectively derail it if Microsoft can guarantee a level playing field in the gaming sector. An endorsement from the competition authorities would cause Activision’s share price to jump by more than 30%.
Microsoft in January offered $68.7 billion ($95 per share) to acquire game developer Activision Blizzard. Anticipating, he had set the date of the transaction for June 2023 – the authorities indeed need a lot of time to decide; they must ensure that Microsoft will not acquire an excessively dominant position in the segment, which it could possibly abuse.
…
Microsoft in January offered $68.7 billion ($95 per share) to acquire game developer Activision Blizzard. Anticipating, he had set the date of the transaction for June 2023 – the authorities indeed need a lot of time to decide; they must ensure that Microsoft will not acquire an excessively dominant position in the segment, which it could possibly abuse. Convinced of the contrary, the Federal Trade Commission (FTC), the American regulator, has decided to take legal action. The approach is hardly surprising; but while the FTC is indeed responsible for reviewing projects with a critical eye, the final decision is not within its purview. Investigations are ongoing in the European Union and the United Kingdom as well, but it is not known if the courts of these countries will also be seized. Microsoft believes that it is able to guarantee a level playing field in the gaming sector. Its competitors, they fear that it will continue to offer games, existing and new, from the Activision offer on their platforms, to reserve them for the Xbox. Sony (PlayStation) and Nintendo (Switch) are the most vocal opponents of the project. But if Microsoft can guarantee that all the titles will remain available, nothing can, objectively, put a spoke in its wheels. The company founded by Bill Gates has every interest in not changing anything, because only a minimal part of its gaming income comes from consoles (hardware) and one-off software sales do not weigh very heavily either. The group, which has launched its own cloud gaming service, has a subscription system called Game Pass. The offer of additional features, which allows not to limit revenue from the sale of the software itself, is also expanding. Activision had to delay the launch of a number of games in the first half. The sequel to the blockbuster The Call of Duty, released on October 28, made up for much of this delay. It was very well received, including by the sphere of gamers. The first sales figures are very encouraging, and new launches are planned for the weeks and months to come. The King division, which specializes in games for mobile platforms, now represents 40% of the group’s turnover. It is to Candy Crush, the mobile game which, for years, has generated the most turnover in AppStores in the United States, that this division owes most of its success. Due to the current procedure, Activision is not authorized to issue financial forecasts. Its net cash reached at the end of the third quarter 7.3 billion dollars. The strong discount of Activision compared to the amount offered by Microsoft is explained by the length of the procedure and by the uncertainties surrounding its outcome. An endorsement would cause the price to jump by more than 30%. In the worst case, investors would have Activision securities in their portfolio; which would not be a sanction since, on the operational level, the situation is improving, now that the delays in the launches and the shortages of chips have been largely overcome. Activision is all about speculative investing right now; the buyer would however be in good company, since Warren Buffett holds, through his Berkshire Hathaway vehicle, an important position in this company. Tip: BuyRisk: HighRating: 1CPrice: $75.07Ticker: ATVI USISIN Code: US00507V1098Market: NasdaqCapit. market: 58.5 billion USDC/B 2021: 20C/B expected 2022: 25Perf. course over 12 months: +27% Perf. share price since 01/01: +11% Dividend yield: 0.6%