Microsoft snaps up Call of Duty maker in £50bn deal
‘Usher in a new era of gaming’
MICROSOFT has agreed to buy the maker of Call of Duty in the biggest-ever takeover in the video game industry.
The US giant will pay £50.6bn for California-based Activision Blizzard, making it the world’s third-largest computer games firm behind Sony of Japan and China’s Tencent.
The swoop will trigger a hefty windfall for Activision’s long-serving chief executive Bobby Kotick, who stands to make more than £276m for his stake.
Activision shares rose by almost 26pc on a tough day for other tech stocks on Wall Street as worries about rising interest rates sent the nasdaq down 2.6pc. microsoft fell 2.4pc but is still worth £1.7trillion.
Activision sells some of the world’s most popular gaming franchises including military shoot-em-up Call of Duty (pictured), puzzle game Candy Crush and fantasy series World of Warcraft.
The microsoft bid makes Activision five times more valuable than Rolls-Royce and is on a par with the £50bn that Unilever has offered for the consumer healthcare arm of Glaxosmithkline.
Activision dates back to 1979 and merged with Blizzard in 2008 to create the company now being bought by microsoft.
It has offices around the world and employs nearly 10,000 staff, and the deal is the latest consolidation in the sector amid a scramble for dominance in digital entertainment.
Grand Theft Auto maker TakeTwo Interactive this month snapped up Zynga, the maker of Farmville, for £9.4bn. ‘Gaming is the most dynamic and exciting category in entertainment across all platforms,’ said microsoft boss Satya nadella. ‘We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming.’
The Activision acquisition marks the biggest move by nadella since he took the helm at the company in 2014. It is the largest takeover ever by microsoft and the largest in the history of the video game industry.
microsoft’s expansion in the gaming market has been under way for some time, with the group taking over video game studio Bethesda, the owner of franchises including Doom and Wolfenstein, for £5.5bn in march last year.
The acquisition will allow microsoft to add Activision’s library to its Game Pass subscription service, which offers players a huge selection of games to play on the company’s Xbox consoles and computers in a similar manner to the way people watch films and TV shows through netflix.
The merger is expected to be completed next year.
Kotick will stay on as boss at Activision, a decision that will likely come as a relief to the 59year-old as he battles a sexual harassment scandal that engulfed the company last summer.
The firm revealed this week that it has sacked or removed over 30 employees and disciplined a further 40 since a lawsuit alleging widespread sexual harassment and discrimination was filed by California authorities in July.
Kotick, one of the industry’s highest-paid bosses, came under fire for the initial handling of the crisis, prompting him to admit in an open letter to employees that Activision’s first response to the allegations had been ‘tone deaf’.
In november, he faced calls to resign from a group of investors following a Wall Street Journal report that said Kotick had been aware of incidents of harassment but had failed to inform the board of directors.