Microsoft is paying nearly $70 billion for Activision Blizzard, the maker of Candy Crush’ and ‘Call of Duty,’ as it seeks an edge in the fiercely competitive business of mobile games and virtual reality technology.
The $68.7 billion all-cash deal will transform Microsoft, maker of the Xbox gaming system, into one of the world’s largest video game companies and help it compete with tech rivals such as Meta, formerly Facebook, in creating immersive virtual worlds for work and play.
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If the deal survives the scrutiny of US and European regulators in the coming months, it could also be one of the biggest tech acquisitions in history. Dell bought data storage company EMC in 2016 for around $60 billion.
Activision has been rocked for months by allegations of misconduct and unequal pay, and it was addressed by Microsoft CEO Satya Nadella on a conference call with investors on Tuesday.
“Our organization’s culture is my number one priority,” Nadella said, adding that “it’s critical for Activision Blizzard to move forward with our” commitments to improve our workplace culture.
Activision revealed last year that it was being investigated by the Securities and Exchange Commission over complaints of workplace discrimination. This was after California sued the Santa Monica-based company in July, citing a “frat boy” culture that had become “breeding ground for harassment and discrimination against women.”
Activision CEO Bobby Kotick will retain his role, and he and his team will continue to focus on efforts to further strengthen company culture and accelerate business growth.
Wall Street saw the acquisition as a big win for Activision Blizzard Inc. and shares soared 27% in early trading Tuesday, offsetting losses in the past six months since the California discrimination lawsuit was filed. Microsoft shares slid less than 1%.
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Last year, Microsoft spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, which is behind popular video games The Elder Scrolls, Doom and Fallout.
Microsoft, based in Redmond, Wash., said the two acquisitions will help bolster its Xbox Game Pass gaming subscription service.
Founded in 1979 by former Atari Inc. employees, Activision was responsible for games such as “Guitar Hero” and the “World of Warcraft” franchise. Kotick has been CEO since 1991.
Microsoft said it expects the deal to close in the next fiscal year 2023, which begins in July. The Activision business unit would then report to Phil Spencer, who led Microsoft’s Xbox division and will now serve as CEO of Microsoft Gaming.
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