Microsoft’s proposed acquisition of Activision Blizzard is facing regulatory hurdles, with Sony filing a complaint to block the deal. Activision’s share price is still trading below Microsoft’s offer price, as investors remain cautious about the transaction. The FTC is currently scrutinizing the deal and if they prevail, the likelihood of the acquisition proceeding by the July 18 deadline will diminish.
Key Points
1. Microsoft’s proposed acquisition of Activision Blizzard is facing regulatory hurdles, with the FTC seeking to block the deal due to concerns about Microsoft’s control over Activision’s games.
2. Sony, the maker of PlayStation consoles, has filed a complaint with the FTC to stop the acquisition, further complicating the regulatory process.
3. Activision’s share price is still trading below Microsoft’s offer price, indicating investor skepticism about the deal’s potential success and the possibility of regulatory intervention.
Microsoft’s $69 billion acquisition of Activision Blizzard is facing regulatory obstacles. One such obstacle is Sony, the maker of PlayStation consoles, which has filed a complaint with the Federal Trade Commission (FTC) to block the acquisition. The fact that Activision’s share price is still trading below Microsoft’s offer price suggests that investors are skeptical about the deal.
On June 22, a federal judge began hearing arguments regarding Microsoft’s planned acquisition. Regulators are concerned that Microsoft would have too much control over consumers’ access to Activision’s games, which are currently available on other platforms. Sony, as a competitor in the gaming console market, has also voiced its opposition to the deal by filing complaints with the FTC.
However, reports suggest that both Sony and the FTC have had missteps in court. For instance, an email from the CEO of Sony’s PlayStation division expressed little concern about Microsoft’s attempt to control Activision’s content, undermining Sony’s argument. Additionally, it is believed that FTC attorneys displayed a lack of familiarity with the gaming industry, asking irrelevant questions and presenting a weak case.
If the FTC succeeds in court, the likelihood of the deal being completed by the July 18 deadline will diminish. It should be noted that the acquisition has already faced obstacles after being blocked by the U.K.’s Competition and Markets Authority in April.
The FTC has been closely scrutinizing various deals recently, including Pfizer’s planned acquisition of Seagen. When investors are skeptical about a deal going through, it is often reflected in the stock’s chart. For example, Seagen’s chart shows that although the stock initially surged on news of the acquisition, it never reached the proposed acquisition price, indicating investor hesitation.
The uncertainty surrounding the Activision Blizzard acquisition is evident in the stock’s chart as well. Despite Microsoft’s $95 offer price, the stock’s price has not reached that level since July 2021. This suggests that investors are not fully confident that the deal will be approved. Therefore, any investors considering buying Activision Blizzard stock should be aware that it is a speculative investment and that the stock could potentially decline if regulators block the acquisition.
However, even if the acquisition is blocked, Activision Blizzard still has a solid revenue stream from its games with significant potential. The company continues to release new games, ensuring a steady flow of income regardless of the Microsoft transaction.
In summary, Microsoft’s acquisition of Activision Blizzard is facing regulatory hurdles, including opposition from Sony. The skepticism of investors is reflected in the stock’s price, which has not reached Microsoft’s offer price. The outcome of the acquisition remains uncertain, and any investment in Activision Blizzard should be considered speculative.
