Microsoft has made gaming history by announcing on Tuesday that it will acquire ‘Call of Duty’ maker Activision Blizzard for $68.7 billion in what is the largest acquisition in the history of the industry.
The transaction will be the largest in Microsoft’s history, and it is expected to be the largest all-cash acquisition in history.
Here’s what you need to know about the world-record-breaking agreement:
Microsoft, the maker of the Xbox gaming system, will become one of the world’s largest video game companies as a result of the all-cash $68.7 billion transaction.
With the acquisition, Microsoft will surpass Tencent, the Chinese gaming company, and Sony, the Japanese manufacturer of PlayStation game consoles, to become the world’s third-largest gaming company by revenue.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today,” said Microsoft Chief Executive Satya Nadella in a statement announcing the acquisition. “Gaming will play a key role in the development of metaverse platforms,” he added.
For those who are unfamiliar with the company, Activision is best known for popular video games such as Call of Duty and Tony Hawk’s Pro Skater. Activision, founded in 1979 by former Atari Inc employees, has developed or acquired many of the most popular video games, ranging from Pitfall in the 1980s to Guitar Hero and the World of Warcraft franchise today.
According to an Associated Press report, if the deal passes muster with US and European regulators in the coming months, it could become one of the most significant technology acquisitions in history. Dell acquired EMC, a data-storage company, for approximately $60 billion in 2016.
At a time when Activision has been the subject of numerous complaints about sexual harassment, misconduct, and workplace discrimination, the acquisition is particularly significant. It was under investigation by the Securities and Exchange Commission last year after receiving complaints of workplace discrimination, and in September, it reached a settlement with workers’ compensation regulators in the United States.
In July, the California Department of Civil Rights filed a lawsuit against the Santa Monica-based company, claiming that it had developed a “frat boy” culture that had become a “breeding ground for harassment and discrimination against women.”
A press release announcing the acquisition states that Bobby Kotick, the controversial CEO of Activision Blizzard, will remain in his position following the acquisition.
This is a much bigger deal than LinkedIn
Previously, Microsoft’s most expensive acquisition was LinkedIn in 2016, which cost more than $26 billion.
According to CNBC.com, at the time of the LinkedIn announcement, Microsoft was valued at approximately $400 billion, meaning that the purchase represented approximately 6.5 percent of the company’s market capitalization.
As of today, Microsoft has a market capitalization of nearly $2.3 trillion and is paying Activision only three percent of its market capitalization.