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Activision Blizzard stock falls 20% below Microsoft offer price as MSFT CEO says ATVI deal will go ahead

09:29, 23 September 2022

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A image of the Microsoft and Activision Blizzard logo.
Global regulators have been hot on the heels of the deal - Photo: Shutterstock

The acquisition of gaming group, Activision Blizzard (ATVI) by tech giant Microsoft (MSFT) for $68.7bn (£56bn) is set to be one of the biggest takeover deals in tech history, but it is facing several challenges as global regulators question the legality of the deal.

As the takeover remains in the balance, the ATVI stock price has fallen 20% below the MSFT offer price of $95-a-share.

ATVI stock price is currently at $77.03. Nevertheless, since the takeover bid was announced on 18 January, its shares have gained 18%.

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Microsoft (MSFT) share price chart

ATVI  stock price remains below MSFT offer 

ATVI shares still remains below MSFT’s proposed $95-a-share offer, this is an indication that investors are weighing the possibility that the deal could be blocked by global regulators.

Regulators have been scrutinising the deal closely and the UK's Competition and Markets Authority (CMA) has started its Phase 1 investigation into Microsoft (MSFT). On 1 September the CMA released a statement.

Sorcha O’Carroll, Senior Director of Mergers at the CMA, said that if the its current concerns are not addressed within five days (8 September), it would explore this deal in an in-depth investigation to reach a decision that works in the interests of UK gamers and businesses.

"The CMA has also received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem. Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming," the CMA said in a statement.

The CMA followed up this statement on 15 September and said that it had referred the anticipated acquisition by MFST for “an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this Merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.”

The CMA may have doubts over the deal, but MSFT seems very confident.

AAPL

138.07 Price
-2.780% 1D Chg, %
Long position overnight fee -0.0064%
Short position overnight fee -0.0059%
Overnight fee time 21:00 (UTC)
Spread 0.05

AMZN

113.19 Price
-1.420% 1D Chg, %
Long position overnight fee -0.0064%
Short position overnight fee -0.0059%
Overnight fee time 21:00 (UTC)
Spread 0.13

NVDA

121.62 Price
-0.450% 1D Chg, %
Long position overnight fee -0.0064%
Short position overnight fee -0.0059%
Overnight fee time 21:00 (UTC)
Spread 0.24

AMC

6.98 Price
-2.400% 1D Chg, %
Long position overnight fee -0.0308%
Short position overnight fee -0.0137%
Overnight fee time 21:00 (UTC)
Spread 0.08

“There were a few sweet spots including both Microsoft and Activision Blizzard following a Bloomberg interview with the Microsoft boss Satya Nadella who said he remained confident he’d get approval for his company’s takeover of the Call of Duty creator,” Danni Hewson, AJ Bell financial analyst wrote in a note.

“The UK’s competition watchdog has launched a second stage probe of the deal citing concerns about what it might mean for consumers. Will the $69bn deal get across the line? Investors like a fight and Nadella is clearly up for it himself.”

 

Regulator problems

Nevertheless, it’s not just the CMA that MSFT must contend with. Brazilian and US regulators are also on the case, with the US Federal Trade Commission (FTC) looking into an antitrust review of the deal to determine if the takeover would give Microsoft’s Xbox gaming console an unfair competitive advantage.

The European Commission (EC) has also launched an antitrust investigation in to whether Microsoft (MSFT) would shut out its competitors from Activision Blizzard’s popular gaming library.

Activision Blizzard (ATVI) share price chart

In addition, Microsoft (MSFT) has told regulators in New Zealand, that Activision Blizzard doesn’t produce any “must have” games. The softer and dismissive language is said to be designed to reduce regulator concerns over MSFT takeover of ATVI.

Replying to New Zealand’s commissioners in June, MSFT said: “Specifically, with respect to Activision Blizzard video games, there is nothing unique about the video games developed and published by Activision Blizzard that is a ‘must have’ for rival PC and console video game distributors that could give rise to a foreclosure concern.”

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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