Microsoft Conquers the Gaming Sector and Beyond

On 18 January 2022, Microsoft Corp announced the friendly acquisition of Activision Blizzard Inc. The deal was announced as a full cash transaction worth $67.8B. The transaction is expected to be completed by 30 June 2023.

Investment Considerations

The cash buyout transaction, which has yet to be approved by US antitrust regulators, has a value of $67.8 billion excluding net debt and $75 billion including net debt. The acquisition is Microsoft’s largest in history, exceeding the $26.2 billion LinkedIn deal in 2016. It is also the largest money ever spent on an acquisition by a tech company. Furthermore, it is by far the largest gaming transaction in history, with the $13 billion mergers of Flutter and TSG in 2019 and the $11 billion acquisition of Zynga by Tack-Two (T2) in January 2022.

Activision was bought out at a share price of $95 per outstanding share. This price reflects a significant premium over the previous week’s Activision Blizzard trade. The deal has a 14.67x EV/EBITDA multiple and a $61.5 billion equity value. If either Microsoft or Activision Blizzard were to terminate, they would be required to pay $2-3 billion and $2.27 billion, respectively.

Gaming Market and Metaverse

The acquisition of Activision Blizzard extends beyond Microsoft’s willingness to diversify its offering. The transaction is a critical component in the race to the metaverse, in which all of the major tech giants and others are vying for a piece of what has been dubbed as the new internet. The video game market has risen substantially in recent years, with an actual market worth of more than $155 billion in 2020, expected to increase by another $100 billion by 2025. The worldwide metaverse market is estimated to be worth $828.95 billion by 2028, with a CAGR of 43.3% from 2021 to 2028.

Microsoft Corp and Activision Blizzard

Founded by childhood friends Bill Gates and Paul Allen, Microsoft Corporation is a global technology corporation that manufactures computer software, consumer electronics, personal computers, and associated services. It is also involved in other sectors such as cloud computing, the internet, corporate venture capital, and now after Activision Blizzard’s acquisition in the video games industry more than ever. 

This latter is the 5th biggest game publisher by revenue and is part, along with Microsoft, of the Fortune 500. Among the most famous video games produced by Activision is possible to find Call of Duty, World of Warcraft, Overwatch, Candy Crush, Skylanders, Diablo, StarCraft, Guitar Hero, Hearthstone and many others.


The market seems to be penalising Sony Group Corp after the deal. The company has had a close relationship for years with Activision who had the marketing rights for Call of Duty. However, Phil Spencer, Microsoft’s head of games, has informally announced that they will not be taking Activision’s most popular game, from Sony’s PlayStation.

Read and download the full report here

Authors: Pietro Giulio Comello, Majda Ouahid, Alexander Klaphake


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