How to Benefit from Activision's Struggles as Its Stock Drops


 Regulators are closely monitoring big tech. Large IT transactions are being examined. What is the progress on the contract? How would you characterize your interactions with regulators?

Correct, I believe that is what regulators do and why they are in place. I'm pleased with the advancements we've made as a result of asking good, tough questions like, "Okay, what is our intent?" What does it mean if you extend this over a period of five years? Does this limit the market?

Activision's Stock Drops

Persuaded that the transaction will be successful

  • I don't know what my confidence means because I've never completed a deal worth 70 billion dollars, but I can say that the talks we've been having seem promising, and we're actively participating in them by attempting to be open and honest about our objectives. Particularly Activision is up against a lot of obstacles in this.
  • Lawsuits have been filed. How worried were you about this contract while you were considering it given that there had been employee walkouts? Before we announced the acquisition, we had access to the company's data to see what the actual reportable figures were. We definitely signed up as a team to say that, just as we are on our own path with Xbox, we will expand that journey if this deal closes.
  • But you'll undoubtedly speak with the Microsoft board about it. What news stories will they find when they use its search engine, Activision, to research the deal? There were uncertainties; as a result, we have learned and will continue to learn.
  • We're committed to that path because we think advancement is essential to the success of our company, not just for the benefit of our teams but also for the creators who utilize our platform.
  • I'm not in a position to say that there have been specific allegations that Bobby was aware of things since we're still in the regulatory period. When the deal closes, we'll have greater control over how they're managed and how things go, but until then, we're in the regulatory phase.

He didn't inform the board that it had occurred. What information regarding what he knew and what he didn't know has he conveyed to you? The teams have been the topic of our discussions, as well as where they are in the closure process and whether they can achieve the necessary progress. Are they making the efforts necessary to advance on their journey? I think they're dedicated to that, and based on the work they're now doing, there's.

Microsoft has reportedly stated that they will recognize the unions of Activision's divisions, and I am aware of this. What does that resemble? I haven't managed a company with unions, so I can't speak for certainty, but in working through this, I can say that we acknowledge workers' need to feel safe, heard, and fairly compensated in order to do great work. As a result, we thought it was important to make a public statement on this front for workers who are there and making decisions about their employment and how they want to understand how that relationship looks, as they want to know what that relationship looks like. What a successful transaction for Microsoft would entail.

Activision's Stock Drops

Microsoft's acquisition bid caused Activision's shares to decline

After the market closed on Wednesday, a report that the FTC would likely bring an antitrust action to stop Microsoft's acquisition bid caused Activision's shares to decline.

  • Politico reports that the FTC is considering bringing an antitrust case to stop Microsoft from buying the business.
  • Activision and Microsoft reached a $69 billion purchase agreement in January.
  • In Wednesday's after-hours trade, shares of Activision decreased by 4%.
Following a report that claimed regulators may attempt to thwart Microsoft's $69 billion acquisition of the video game publisher, Activision Blizzard shares dropped in after-hours trading on Wednesday.

Activision dropped as high as 5.9% after the bell rang, and at the time of our last check, it was down 3.9% to trade at $73.60. Thanksgiving Day causes the US stock markets to be closed on Thursday.

According to three people with knowledge of the situation, Politico reported on Wednesday that the Federal Trade Commission is likely to try to stop Microsoft's $69 billion acquisition of Activision by filing an antitrust case.

Activision's Stock Drops

  • The regulator is rumored to feel that Microsoft and its flagship Xbox platform would have an unfair advantage in the videogame business if it acquired "Call of Duty" publisher Activision.
  • Insider's request for comment from the FTC was not immediately met with a response.
  • For those who purchased Activision shares after Microsoft revealed a takeover offer in January, including famed investor Warren Buffett, the potential antitrust case could be terrible news.
  • As a bet that Microsoft would complete its acquisition of the video game company, Buffett more than tripled Berkshire Hathaway's holding in Activision to 64 million shares in the first quarter of this year.
  • At the end of the third quarter, Berkshire still owned 60.1 million shares or 7.7% of Activision; the value of this holding as of Wednesday's close was $4.6 billion.
  • Following the closing bell, Microsoft shares increased 0.4% to close at $248.46.

Activision Blizzard was going to be purchased by Microsoft.

  • Without being aware that a Microsoft acquisition was imminent, Warren Buffett's group purchased Activision Blizzard stock.
  • Three months before the takeover offer, in October, Berkshire Hathaway purchased 85% of its shares.
  • Activision Blizzard shares traded at $78 in January, while the average price for Berkshire was $77 per share.
Activision's Stock Drops

According to Warren Buffett, it is untrue that Berkshire Hathaway increased its approximately 2% holding in Activision Blizzard in the fourth quarter in preparation for Microsoft's $75 billion acquisition bid for the video game industry giant.

  • On Thursday, the well-known investor and CEO of Berkshire wrote a message to his company's website to explain the circumstance.
  • He claimed that Todd Combs or Ted Weschler, one of his two portfolio managers, was in charge of acquiring the 14.7 million Activision Blizzard shares in the previous quarter.
  • According to Buffett, his deputy added 85% of the investment in October and the remaining 20% in November at an average cost of $77 per share.
  • According to a Tuesday Wall Street Journal article, Berkshire purchased Activision Blizzard shares for less than $67 per share on average. Buffett wrote to three journalists who had made that claim. The reporter at The Journal was informed of the error, according to the millionaire, and the story was updated later that day.
  • The CEO of Berkshire Hathaway underscored that when he and his colleagues placed their wager on Activision Blizzard, they were completely unaware of the Microsoft agreement.
Bill Gates and Warren Buffett are good friends, and Buffett stated he would be shocked if the business software giant had even approached Activision about a prospective acquisition as early as October.

In fact, The Journal previously claimed that Activision Blizzard CEO Bobby Kotick was only contacted by Phil Spencer, head of Microsoft's game division, about a prospective merger after the company's stock price fell in November, only weeks after Berkshire began purchasing the stock.

Activision's Stock Drops

After Microsoft announced the planned merger on January 18, Activision Blizzard's stock price increased from roughly $65 to $82. On Thursday, it finished at $81 and was worth $1.2 billion, or less than $100 million above its cost base, putting Berkshire's holding at that price.

Activision Blizzard shares fell as low as $78 in late January, according to Buffett, so any investor might have invested at a similar price to that of his deputy.

According to Buffett, the sale wasn't a financial windfall for either the buyer or Berkshire.

During the Daily Journal's annual meeting this week, Charlie Munger, a business partner of Warren Buffett, was questioned about the Activision Blizzard wager. However, he referred to CEO Bobby Kotick as "one of the smartest corporate executives I know" while declining to comment on the investment.


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