- Activision stock surges as Microsoft gets game.
- ATVI to be bought for $95 a share or nearly $69 billion in all-cash deal.
- Microsoft to pay a $3 billion break fee if the deal does not go ahead.
Activision (ATVI) shares surged to $90 early yesterday as news broke of a deal with Microsoft (MSFT). The Wall Street Journal appears to have first broken the story, which saw ATVI stock surge straight to $90 or up nearly 40% on the previous close. The story was soon confirmed as Microsoft released a press statement.
Activision Stock News
Microsoft would pay $95 a share, which puts the deal down at $68.7 billion. The deal is all cash and is due to close in 2023. Activision CEO Bobby Kotick is likely to leave the company in 2023 once the deal closes, according to reports. Activision has been under intense scrutiny after accusations of sexual harassment surfaced. The company has reportedly confirmed the exit of 37 employees since the news broke back in July, and Activision has taken action against 44 other employees, according to the WSJ.
The situation with regard to Sony gets interesting as Sony shares dropped sharply yesterday once the rumour was confirmed. Sony was Activision's's largest customer in 2020, accounting for nearly 20% of its revenue. Sony Playstation boss Jim Ryan had expressed "deep concern" at the harrassment allegations and said, "We do not believe their statements of response properly address the situation." Sony now finds itself staring down the possibility that some major Activision titles such as Call of Duty and Candy Crush will no longer be available on the Sony Playstation platform.
It appears from the latest reports that Microsoft took advantage of the timing to negotiate the deal. According to Bloomberg, Microsoft senior executives suggested that PlayStation head Phil Spencer contact Activision and make it clear that Microsoft had concerns. Microsoft also wanted to keep an eye on the fallout and see if a potential deal could be done. The company had been on the lookout for acquisitions in the gaming space.
Activision Stock Forecast
The deal is set at $95 and given that Microsoft has agreed to pay $3 billion if the deal falls through it must be fairly confident of getting it completed. Currently, ATVI shares are trading at $82.53 in Wednesday's premarket. As is usually the case in a merger, the shares of the target company usually trade at a lower price than the takeover price due to risk premium. Occasionally, they can trade above the takeover price if investors believe the offer is too low or they anticipate a bidding war from another pursuer. In this case, there cannot be too many companies with $69 billion in cash waiting in the wings.
Activision (ATVI) chart, daily
Microsoft Stock News
By comparison Microsoft stock fell on the news. The deal will immediately be accretive to earnigs on completion. MSFT shares closed just over 2% lower on Tuesday after the announcement. Technically, the stock looks to be under pressure with $318.23 the bullish pivot and the next key support coming from the 200-day moving average at $292.
Microsoft (MSFT) stock chart, daily
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends losses toward 1.0500 as focus shifts to US ISM PMI
EUR/USD stays under bearish pressure and declines toward 1.0500 on Monday. The pair is dragged down by dovish ECB-speak, French political woes and a firmer US Dollar following Trump tariffs threat on BRICS. Investors now await US ISM Manufacturing PMI data.
GBP/USD struggles to hold above 1.2700 as USD rebound continues
Following a consolidation phase in the early European session, GBP/USD turns south and trades below 1.2700 on Monday. The pickup in the safe-haven demand for the US Dollar, as traders remain wary over the latest Trump tariffs threat on BRICS nations, weighs on the pair ahead of US ISM PMI data.
Gold stays below $2,650 on broad-based USD strength
Gold starts the new week on the back foot and trades below $2,650. The renewed US Dollar strength and the recover seen in the US Treasury bond yields don't allow the pair to stage a rebound as investors' focus shifts to US PMI data.
The week ahead: Payrolls take centre stage, as French government poised to collapse
At the start of this week, the focus is likely to be on France. On Sunday, Marine Le Pen said that her party’s talks with the government led by Michel Barnier, had broken down, which paves the way for a no-confidence vote in the technocratic government that has no majority in Parliament.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.