Although Activision Blizzard's shareholders approved the sale of the company to Microsoft Corp, Wall Street appears to be betting against the merger's success.
Activision Blizzard's shareholders voted Thursday to approve the $69 billion sale to Microsoft, but Bloomberg noted the company's share prices indicate investors are distrustful of the buyout. Microsoft's $95 a share offer sits 23% above Activision's current price, creating a risk premium more than double that of Twitter's following Elon Musk's proposal. In fact, the news outlet points out it is higher than most of the announced, but still pending, deals Bloomberg is currently tracking.
President Joe Biden's antitrust enforcers appear to be instilling fear in investors, curating concerns the deal could be blocked or delayed even if it does succeed. Despite Activision and Microsoft's agreement, the deal requires approval from the United States government and others, including the European Union and China.
Another factor in investor concerns stems from the need for approval by the Federal Trade Commission, led by Lina Khan. Kahn has long expressed a need for a more assertive approach to reviewing deals by the biggest technology companies and has blocked several such mergers during her tenure. Some of these include Nvidia Corp.'s acquisition of Arm Ltd. and Lockheed Martin Corp.’s deal for Aerojet Rocketdyne Holdings Inc. She also revived the FTC's case against Meta Platforms Inc. for its interest in splitting off WhatsApp and Instagram.
Microsoft would become the world's third-largest gaming company should the deal close by its June 2023 deadline. Not only would it take ownership over the massively popular gaming franchises Call of Duty and World of Warcraft, but Microsoft would also gain control over Candy Crush developer King. The mobile gaming developer made $2.58 billion in revenue last year.
The complete results of the meeting today won't be released until the next few business days when the company files a Form 8-K with the U.S. Securities and Exchange Commission. However, the company revealed that more than 98% of Activision shares voted in favor of the deal. A minor stakeholder in the company, activist shareholder SOC Investment Group, encouraged investors to vote down the deal earlier this month. Its primary concern centered around providing a golden parachute for Activision Chief Executive Officer Bobby Kotick following the company's serious legal troubles.
In the summer of last year, Activision Blizzard came under scrutiny when The Department of Fair Employment and Housing filed a lawsuit against them following a two-year investigation. Female employees reported workplace discrimination and sexual harassment, specifically citing the company's "frat boy" culture. The case recently became more political following accusations that California Governor Gavin Newsom had interfered to protect Activision Blizzard.
Source: Bloomberg