This is how Activision Blizzard is bought: months of negotiations, several interested parties and a target of $95 per share


On January 18, Microsoft announced an agreement to buy Activision Blizzard in exchange for 68.7 billion dollars. While the video game industry assimilated the historic movement, both companies were already working on gathering the necessary information for regulators to approve the operation. Part of this process includes a report to the SEC (United States Securities and Exchange Commission) detailing the timeline of the negotiations and explaining how Microsoft bought Activision Blizzard.

The dance begins: Microsoft opens the track and offers 80 dollars per share

It all starts on November 19, 2021, when in a conversation on another topic Phil Spencer, head of Xbox, tells Bobby Kotick, CEO of Activision Blizzard, that Microsoft is interested in exploring strategic opportunities between both companies, so he summons him to speak the next day with Satya Nadella, executive director of the technology company. Kotick reports to the chairman of the board of directors of Activision Blizzard and a financial adviser comes into play.

This comes three days after The Wall Street Journal discovered that Bobby Kotick was aware of sexual abuse cases occurring within Activision Blizzard, and one day before Phil Spencer commented in an internal email that Microsoft is reevaluating its relationship with the company. in the wake of the scandal.

After multiple conversations, on November 26, Spencer informs Kotick that, based on the information they have at Microsoft, they value Activision Blizzard at $80 a share that they will pay in cash. On November 28, Kotick tells Spencer that Activision Blizzard’s board of directors is open to considering a purchase proposal, but only if Microsoft raises its offer to a range between $90 and $105 per share. On November 29, Spencer agrees to negotiate on those terms.

The competition arrives and Microsoft rises to 90 dollars per share

From that moment on, the rest of the members of the board of directors of Activision Blizzard and several other external advisors are informed, so that Microsoft’s offer reaches the ears of the competition. This is the only way to explain why on December 3 Activision Blizzard receives an email from a gaming company they refer to as “Company A” to explore strategic opportunities. On December 6, Activision Blizzard and Microsoft sign a confidentiality agreement in order to share financial information and better refine the purchase offer.

During the first fortnight of December, many meetings are held in which the Activision Blizzard board assesses the interest of up to four companies (A, C, D and E). Kotick receives the green light to meet with the executives of these companies, but none of them come to put on the table a proposal that includes a purchase price. An “Individual B” even appears willing to buy all or part of the Blizzard Entertainment business along with some investors who have also not been identified.

On December 10, Spencer meets with Kotick again and proposes a purchase price of $90 per share. Kotick considers him low. Microsoft also puts on the table an agreement to hold exclusive negotiations until January 15, 2022 and asks for a response (which it does not get) before Monday, December 13. Between December 10 and 15, the Activision Blizzard board assesses all scenarios, including possible purchase agreements with other companies and even remaining an independent company.

Microsoft reaches 95 dollars per share and there is an agreement

Finally, on December 15, the board of Activision Blizzard decides to ask Microsoft to increase its offer from 90 to 100 dollars per share. In addition, Kotick is allowed to continue trading without consulting the board as long as he can get Microsoft to increase its offer to at least $95 a share. On December 16, Microsoft goes up to $93 a share and Kotick tells Nadella that he is not allowed to trade below $95. That same day Microsoft reaches the desired 95 dollars per share.

On December 20, after several days of negotiations during which the last interested parties to acquire Activision Blizzard withdraw, an exclusivity agreement is signed and Microsoft becomes the only company in open talks with the publisher. Now all that remains is to close the agreement and add two clauses in case the operation fails. Microsoft will pay between 2,000 and 3,000 million dollars to Activision Blizzard if the regulators block the purchase, but if it is the shareholders who vote no, the technology company will receive 2,270 million dollars.

We all know the end, on January 18, 2022, Microsoft announced the purchase of Activision Blizzard in exchange for 68.7 billion dollars, that is, 95 dollars per share.