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Microsoft-Activision Deal Slumps, May Reward Investors

Microsoft’s almost $100 billion AUD ($69 billion USD) acquisition of Activision-Blizzard has come to a standstill, resulting in increased doubt that the transaction will ever go through. Despite this, some traders are putting money on the deal, investing in Activision whilst stocks sit at 20% below offer price.

The deal between Microsoft and Activision was announced back in January and has since been under the watchful eye of antitrust regulators, slowing down the acquisition process.

“Given the deal’s sheer size and heightened antitrust scrutiny towards big tech players, that’s ultimately causing the very large spread,” said chief investment officer at Accelerate Financial Technologies Inc, Julian Klymochko.

Stock prices have fallen as a result of this, as well as the need for international approval and shortages in tech supply.

However, this lower stock has caused several big players to take advantage, allowing them to buy low, and if the deal is approved, sell high. Warren Buffett being one such big player, bought a 9.5% share in Activision. A confirmed deal would result in a major pay-out for Buffett and other investors.

Wall Street is in favour of the deal, with 26 of 32 analysts believing that share price will reach the purchase target of $95+ USD ($137.50 AUD). Similarly, Cabot Henderson, market strategist from Jones trading has said that there is a “relatively strong consensus that this deal should go through.”

The deal has been under scrutiny for the risk it poses to competition in the industry. The Federal Trade Commission under Lina Khan has sued the deal, saying that a company’s dominance in one sector can allow them to gain power in another. The same was done in reference to Elon Musk’s acquisition of Twitter, which he is currently trying to back out of.

The share price of Activision is expected to remain volatile until the deal closes at the end of 2023.



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