The past year has been a tumultuous time for finance with a rocky market and many interesting acquisitions taking place. Between the recovery of covid times and the uncertainty of the tech market, stocks have never been more unstable.The most notable example will be the one which we will talk about today will be the controversial acquisition of Activision by the technology giant microsoft.
Firstly a bit about the financial sector which was affected by this. Furthermore, in Investment banking there is a sector titled Mergers and Acquisitions. First of all, a merger occurs when two separate entities combine forces to create a new, joint organization. An acquisition refers to the takeover of one entity by another. There are many legal restrictions for when a company wants to acquire another. The government wants to prevent certain things from occurring in the market, the most prevalent one being the formation of monopolies. Moreover, a monopoly is when one company or player has complete control over one market or specialty. Additionally, Monopolies can directly hurt consumers and they could lead to lack of efficiency and higher prices as the firms are no longer worried about ensuring the goods and services they provide are competitive.
On January 18 2022 Microsoft announced its intent to purchase Activision Blizzard, one of the world's most valuable gaming companies, for $68.7 billion. This news released in January left the deal being rapidly labeled as one of the most influential deals in the brief history of gaming. At this point in time Microsoft already had ownership of Xbox, the other gaming giant. From the date which this was announced skeptics were deeming this deal illegal due to the power over the gaming market Microsoft would be left with. Furthermore, XBox and Activision’s competitors were worried as to what this would do to their market shares. Due to Activision having many nations of operation this deal was susceptible to suit in all of those as it had to go through all the countries regulatory bodies before going through.
In December 2022 the first lawsuit against this deal was filed by the Federal Trade Commision. The FTC were desiring to block the deal entirely. This led to an immense court battel leaving both the parties in a standstill. Microsoft, still with the desire to purchase Activision despite the regulatory hurdles, attempted to finalize the deal during this period. This aggressive move led to the FTC filling for a retaining order on the deal in June 2022. This motion was quickly denied and soon after both parties realized they needed to settle they began meeting to find a solution.
The next nation act was the UK, in April 2023 the Competition and Market Authority decided to block the deal. This was instantly followed by an appeal from Microsoft and Activision Blizzard. Similar to the US, the two parties went into discussion about possible changes to the deal in order to enable it to pass through the authorities. Microsoft ended up restrusting the deal in September 2023 to satisfy the CMA’s demands. This led to the deal being completed on October 13th.
Many more legal battles took place in a plethora of other nations, yet the purchase prevailed. As of October 13th, the nations that had agreed were: the UK, European Union, Ukraine, Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, South Korea, New Zealand and China.
This was a transaction that shook the Mergers and Acquisitions world and changed the gaming industry forever. It now set the tone for the rest of the gaming industry’s future investments and the tactics behind it. If anything, this merger has allowed CEOs to change up the once evident path for gaming companies.
Written by Annika Bjerregaard. Edited by Annika Bjerregaard and Aurore Lebrun
Wow!