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As Microsoft pushes ahead with its proposal to buy Activision Blizzard for $68.7 billion, the official prospectus for the deal has been filed with the US government, and it contains many insights and particulars about the offer and the background surrounding it. The lengthy document provides a timeline for how and when the deal came together, what Microsoft and Activision would have to pay if the deal falls through, and more, like how multiple other companies tried to buy Activision Blizzard, with one specifically looking to buy Blizzard alone.
Starting with the fees, Activision Blizzard must pay Microsoft $2.27 billion if it decides to terminate the deal, while Microsoft would have to pay Activision Blizzard between $2 billion and $3 billion if it backs out.
In terms of the background surrounding the deal, Activision Blizzard said it has always looked for ways to “strengthen Activision Blizzard’s business and enhance stockholder value,” and this has included reviewing potential acquisition opportunities. The company did not, however, disclose the names of any companies that have sought to purchase Activision Blizzard over the years. However, it did clarify that no discussion about a buyout deal ever went beyond “preliminary discussions” until Microsoft made its bid in late 2021.
Activision Blizzard said it has maintained a relationship with Microsoft for more than two decades for Xbox and other endeavors, but it was on November 19, 2021 that conversations about a buyout emerged. That date is notable because it was just three days after The Wall Street Journal published its bombshell report on November 16 about Activision Blizzard’s workplace culture and specifically how CEO Bobby Kotick reportedly knew about and covered up instances of sexual harassment and abuse. It’s also notable that it was on November 18, 2021 that Spencer told staff that Xbox was “evaluating” the company’s relationship with Activision Blizzard in the wake of the WSJ report.
On November 19, 2021, Xbox boss Phil Spencer spoke with Kotick about his interest in “discussing strategic opportunities.” Spencer asked Kotick if he was free for a call with Microsoft CEO Satya Nadella the next day, November 20, 2021. Kotick agreed, and the call took place. Kotick then passed along what he learned to Activision board members Robert Morgado and Brian Kelly, and then Kotick and Kelly engaged with the legal firm Allen & Company to talk about how to move forward and make a deal.
On November 22, 2021, Spencer asked Activision Blizzard to provide additional information about the company’s long-term financial plan. Kotick and Kelly said they did not want to provide this information unless Microsoft could demonstrate it was serious about making a deal that Kotick and Kelly could take to its board of directors to gauge their level of interest.
The executives apparently paused discussions for the Thanksgiving holiday, and then on November 26, 2021, Spencer spoke with Kotick and Kelly again to say Microsoft was “preliminarily considering” making an all-cash deal for $80 per share. On November 28, 2021, Activision Blizzard management came back to the table asking for a deal in the range of $90-$105 per share.
Then on November 29, 2021, Spencer informed Kotick and Kelly that Microsoft would be okay with this range, though it felt more comfortable on the lower end.
“Mr. Spencer also noted a desire to move quickly in advance of a previously scheduled near-term meeting of Microsoft’s board of directors at which Mr. Spencer wished to discuss the potential transaction between Microsoft and Activision Blizzard,” the document said.
On December 1, 2021, Kotick and Spencer introduced each other to their respective legal teams that would manage the deal, and talked about when Activision Blizzard would provide its long-term financial plan to Microsoft under a mutual non-disclosure agreement.
Then on December 3, 2021, Activision Blizzard management chose Allen & Company to lead the deal from a legal basis. Intriguingly, that same day, Activision Blizzard reported that it received an unsolicited email from the CEO of another gaming company asking to meet to discuss a “potential strategic transaction.” This CEO asked Kotick to meet in person as well. The name of this company has not been disclosed.
On December 6, 2021, Activision Blizzard and Microsoft management agreed to terms on sharing confidential financial information to move the deal ahead. The same day, “an individual” emailed Kelly about buying Activision Blizzard’s Blizzard division specifically, but no further details about this were made public in the document.
Then on December 10, Spencer told Kotick and other Activision Blizzard management that it was ready to officially offer $90 per share to acquire the company.
The two companies went back and forth for about another month, liaising with their respective legal teams and considering offers and interests from multiple other, unnamed companies which sought to acquire Activision Blizzard. Then on January 17, 2022, Microsoft and Activision Blizzard officially agreed to terms at around $95 per share, putting the deal at $68.7 billion in the biggest buyout in the history of gaming and one of the largest across any industry, ever. The deal was officially announced and “executed” on January 18, 2022 with a press release from both companies.
The deal hasn’t officially gone through yet, however, as it remains subject to regulatory approvals. Regulatory experts expect it to be scrutinized, but ultimately approved.
Should the deal be approved, a series of Activision games are expected to join Game Pass, further bolstering the appeal of the popular subscription service. Future Call of Duty games will remain multiplatform, but the full particulars around what it all means for Call of Duty and all Activision Blizzard franchises remains to be seen.
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