By Gavin Mackintosh-
Microsoft is paying 68.7 billion dollars (£50.5 billion) for Activision Blizzard, the maker of Candy Crush and Call Of Duty, as it seeks an edge in the fiercely competitive businesses of mobile gaming and virtual-reality technology.
The all-cash deal will turn Microsoft, maker of the Xbox 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 scrutiny from US and European regulators in the coming months, it could be one of the priciest tech acquisitions in history since Dell bought data storage company EMC in 2016 for around 60 billion dollars.
Microsoft said that the $68.7bn (£50.6bn) all-cash deal – which eclipses its previous biggest, the $26bn takeover of LinkedIn in 2016 – will “provide the building blocks for the metaverse”. It is the biggest deal in tech history, eclipsing the $67bn paid by Dell to buy the digital storage giant EMC in 2015.
The deal will see the Xbox maker become the world’s third-biggest gaming company by revenue behind China’s Tencent and Japan’s Sony, maker of PlayStation games consoles.
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“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, the chairman and chief executive of Microsoft. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and make gaming safe, inclusive and accessible to all.
Activision has been buffeted for months by allegations of misconduct and unequal pay, and that was addressed on Tuesday by Microsoft chief executive Satya Nadella in a conference call with investors.
“The culture of our organization is my number one priority,” he said, adding that “it’s critical for Activision Blizzard to drive forward” on commitments to improve its workplace culture.
Activision disclosed last year it was being investigated by the Securities and Exchange Commission over complaints of workplace discrimination.
Chief executive Bobby Kotick will retain his role, and he and his team will maintain their focus on driving efforts to strengthen the California company’s culture and accelerate business growth.
Wall Street saw the acquisition as a big win for Activision Blizzard and shares soared in early trading on Tuesday.
Last year, Microsoft spent 7.5 billion dollars 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 said both acquisitions will help beef up its Xbox Game Pass game subscription service.
Started in 1979 by former Atari employees, Activision has been behind games such as Guitar Hero and the World Of Warcraft franchise.
Microsoft said it expects the deal to close in the 2023 fiscal year, which starts in July. The Activision business unit would then report to Phil Spencer, who has led Microsoft’s Xbox division and will serve as chief executive of Microsoft Gaming.
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