During this week, Microsoft’s proposal to buy Activision entered an unexpected stage of uncertainty. While it was a given that regulators would get involved, few expected they would be so strict. A few months ago everything indicated that the acquisition would come to fruition, but today we are no longer so sure.
A few days ago, reports of Political Y The New York Tomes reported that, almost certainly, The United States FTC (Federal Trade Commission) will put together a legal case to try to block the purchase of Activision. The body, for the moment, has not ruled on the matter, but in the past they had already expressed concern. The reason? They don’t see it as right that a company whose intellectual properties carry so much weight in the video game industry ends up under the control of Microsoft.
The information exposed by both outlets has, of course, had a negative effect on Activision’s stock. Yesterday, Friday, the shares of the company led by the controversial Bobby Kotick opened their trading with a 4.1% down (via Bloomberg), a percentage that accumulates to other recent falls in the publisher of video games.
Although the percentage might seem lower, especially if we take the recent falls of companies like Meta as a reference, there is another factor that must be taken into account. Microsoft’s offer to buy Activision is for $95 per share, which in total adds up to a stratospheric $69 billion.
Certainly, it is common for offers to be higher than the current value of the company that is intended to be acquired. However, when that gap starts to get bigger, the buyer’s shareholders might not look kindly on it. In this case, everything seems to indicate that Microsoft and its investors are fully confident that taking control of Activision will allow it to strengthen its position in different sectors of the industry, mainly mobile games. The purchase, remember, also includes King Digital Entertainment.
Activision and Microsoft, waiting for a possible conflict with the FTC
Now, what happened this week is just the tip of the iceberg of a situation that will surely become more complicated if, indeed, the FTC files a lawsuit to stop the purchase. The federal agency and Microsoft would initiate a legal process. From here anything can happen; from a total blockade, to an arrangement that gives the green light to the acquisition under certain conditions – for which many bet.
Obviously, at Microsoft and Activision they have already echoed the possible action of the FTC, and they are totally willing to face a process in court.
“Any suggestion that the acquisition could have anti-competitive effects is absurd. This merger will benefit gamers and the US video game industry, especially as we face stiffer competition abroad. We are committed to continuing to work cooperatively with regulators around the world to allow the transaction to proceed, but we will not hesitate to fight to defend the purchase if necessary“, commented Lulu Cheng MeserveyActivision’s director of communication.
What’s next now? Based on information from Political, the FTC could file the lawsuit during December. Therefore, possibly in a matter of weeks we are talking about one of the biggest legal battles in the history of video games.