In case you’ve been living under a rock, Microsoft’s $70 billion buyout of Activision Blizzard got blocked by the UK’s CMA a few days ago. And, well, Microsoft as well as Activision Blizzard haven’t had the best responses.
But, while Microsoft insists that it will appeal the outcome, regardless of what analysts might say, Activision Blizzard isn’t too worried if it doesn’t end up being assimilated into the Xbox brand.
As a matter of fact, Activision Blizzard won’t have too many financial troubles regardless of the outcome, as revealed by the company’s longtime CEO.
Bobby Kotick recently joined CNBC for an interview where he pretty much confirmed that the rumors of a massive $3 billion breakup fee, which Microsoft will have to pay Activision Blizzard if the merger falls through, aren’t unfounded.
Here’s what Kotick said about a potential breakdown in the acquisition:
Well, I think our first focus is trying to get the deal done, which I think is in the interest of the industry of competition. If it weren’t to get done, you know, by the end of the year, I think we’ll be sitting on something like $18 billion of cash. And, you know, we’ve, I think if you look at our 30-year history, we have deployed capital for the benefit of our shareholders very well and we’ll continue to do that.
TLDR; Microsoft stands to lose the most if it doesn’t end up buying Activision Blizzard after putting in so much money and effort.
This explains why Activision Blizzard’s boss is so confident in throwing accusations around. At the end of the day, he knows that shareholders will walk away happy, and this effectively guarantees that he’ll remain seated in his position regardless of the outcome.
This isn’t the ideal situation either, especially after the abuse allegations he faced prior to the buyout, but it is what it is.
Of course, shareholders would prefer to see Microsoft take over the company. Financially, it makes sense for the tech giant to own Activision Blizzard and make it a part of the Xbox umbrella. Unlike now where Activision Blizzard stock prices are in jeopardy of falling even further with no signs of recovering despite the successful launch of Call of Duty: Modern Warfare 2 late last year.
Besides, Microsoft has already secured deals based on the promise that it will eventually own Call of Duty, among others, so it has all the incentive to do everything in its power to get the deal over the line.
As for Kotick, some believe that he’ll be gone from Activision Blizzard regardless of which way the deal goes, but, hey, at least he’ll get paid handsomely either way.
