Microsoft is making history after announcing on Tuesday that it will be acquiring ‘Call of Duty maker Activision Blizzard for $68.7 billion in the most critical gaming industry deal.
The deal will be Microsoft’s biggest-ever and is set to be the largest all-cash acquisition on record.
Here’s what you should know about the record-making deal:
The all-cash $68.7 billion deal will turn Microsoft, maker of the Xbox gaming system, into one of the world’s largest video game companies.
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.
Announcing the acquisition, Microsoft Chief Executive Satya Nadella was quoted as saying, “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.”
Activision is known for popular games such as Call of Duty and Tony Hawk’s Pro Skater for those who don’t know. Started in 1979 by former Atari Inc employees, Activision has created or acquired many of the most popular video games, from Pitfall in the 1980s to Guitar Hero and the World of Warcraft franchise.
An Associated Press report said that if the deal survives scrutiny from US and European regulators in the coming months, it could be one of the most significant tech acquisitions in history. Dell bought data-storage company EMC in 2016 for around $60 billion.
The deal comes when Activision has been buffeted by sexual harassment, misconduct, and workplace discrimination complaints. Last year, it was being investigated by the Securities and Exchange Commission over complaints of workplace discrimination and, in September, settled claims brought by US workforce discrimination regulators.
In July, California’s civil rights agency sued the Santa Monica-based company, citing a “frat boy” culture that had become a “breeding ground for harassment and discrimination against women.”
According to a press release detailing the announced acquisition, Bobby Kotick, the controversial CEO of Activision Blizzard, will continue in his role.
A bigger deal than LinkedIn
Microsoft’s previous top acquisition was LinkedIn in 2016, which cost over 26 billion.
CNBC.com reports that at the LinkedIn announcement, Microsoft was valued at about $400 billion, so the purchase amounted to roughly 6.5 percent of its market cap.
Today, Microsoft has a valuation of almost $2.3 trillion and is paying just three percent of its market cap for Activision.