Microsoft Agrees to Buy Activision Blizzard for Nearly $70 Billion

New York Times - Tue Jan 18 13:48

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Gamers play the game Call of Duty: Black Ops at the 24th Electronic Expo in Los Angeles in 2018.
Credit...Frederic J. Brown/Agence France-Presse — Getty Images

Microsoft agreed on Tuesday to buy Activision Blizzard, the video game maker behind hits like Call of Duty and Candy Crush, for $68.7 billion in cash. It is the largest takeover in Microsoft’s 46-year history and a big bet on its future direction.

The deal plants Microsoft’s flag in the emerging battle for dominance in the so-called metaverse, the next-generation internet that melds the traditional online world with virtual and augmented reality.

It is also a challenge to regulators in Washington, as Democrats and Republicans alike have pushed to limit the power of technology giants.

In buying Activision, which faced accusations of sexual harassment and discrimination that senior executives ignored, Microsoft appears to be rebuffing a controversy about the game maker’s workplace culture. The allegations have weighed on Activision, with its shares falling 27 percent since California sued the company in July over the matter. The game maker’s shares are up nearly 40 percent in premarket trading. Microsoft’s shares fell by 1 percent after the announcement.

The transaction may be seen as a victory for Bobby Kotick, Activision’s longtime chief executive, whom some critics had sought to oust over the controversy. Mr. Kotick negotiated a big premium for investors — Microsoft is paying $95 a share, roughly 45 percent above his company’s stock price before the announcement — and will continue running the company.

Microsoft would gain Activision’s nearly 400 million monthly gaming users and access to some of the world’s most popular games, which are expected to form a cornerstone of the metaverse. Combining with Microsoft will also give Activision access to a vast array of artificial intelligence and other programming talent.

It would give Microsoft a significant boost in particular against Facebook, whose renaming of its parent company to Meta underscored its commitment to the metaverse. Adding Activision could bolster the virtual reality offerings from Microsoft’s Xbox unit as it competes with Facebook’s Oculus system.

“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,” Satya Nadella, Microsoft’s chief executive, said in a statement.

The deal would also drastically transform Microsoft. Despite owning Xbox and the studios behind Minecraft and Halo, the company has remained largely focused on corporate users for software like Office 365 and especially Azure, its cloud-computing business that competes with the likes of Amazon and Google.

This is breaking news. Check back for updates.

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Credit...Mike Blake/Reuters

Goldman Sachs’s fourth-quarter earnings fell, the investment bank said on Tuesday, taking the shine off a solid year in which it reported a record $21.6 billion profit.

The Wall Street bank said profit in the final three months of the year dropped 13 percent from the previous year to $3.94 billion, or $10.81 a share, falling short of analysts’ expectations. The results echoed a pattern of declining fourth-quarter earnings set by other banking giants — JPMorgan Chase and Citigroup — that reported results on Friday.

But the firm still racked up its largest-ever annual profit on a record revenue of $59.3 billion, helped by deal-making by its investment bankers.

“2021 was a record year for Goldman Sachs,” David M. Solomon, the company’s chief executive, said in a statement. “Our leadership team remains committed to growing Goldman Sachs, diversifying our businesses and delivering strong returns.”

Shares of Goldman Sachs fell more than 2 percent in premarket trading.

Goldman Sachs joined its Wall Street peers in bumping up pay after producing blockbuster profits. The company’s investment bankers brought in record revenue, while its stock and bond traders generated the highest revenue in 12 years, even as quarterly revenue in its trading division slumped 7 percent. Their performance prompted “significantly higher compensation” expenses, which rose 33 percent from a year earlier.