When Microsoft announced it was buying Activision Blizzard to bolster its Xbox gaming division, the news came as a surprise to many. For months, the ailing publisher has been in the headlines because of the sexual harassment lawsuit filed by California’s Fair Employment Agency in July. The bad press peaked on November 16 thereafter issued a report alleging that Activision CEO Bobby Kotick not only knew about many incidents of sexual harassment at the company, but acted to protect those responsible for the abuse.
Days after this article appeared, Xbox CEO Phil Spencer reportedly told employees he was “disgusted and deeply disturbed by the horrific events and actions” allegedly taking place at Activision Blizzard and that Microsoft would be working with the publisher. A day after that email, Spencer called Kotick to begin the process, which a US Securities and Exchange Commission said should end with Microsoft announcing plans to buy Activision Blizzard about two months later first discovered by .
Starting on page 31 of the document, Microsoft devotes almost 10 pages to the detailed timeline of its discussions with Activision. According to the filing, during their Nov. 19 phone call, Spencer Kotick said that “Microsoft is interested in discussing strategic opportunities between the two companies,” and asked if he was available to speak with Microsoft CEO Satya Nadella the next day . This Saturday, November 20, Nadella made it clear that Microsoft hopes to buy the publisher, stating that the company is “interested in exploring a strategic combination with Activision Blizzard.”
It turns out that the rapid pace at which the talks were moving was largely due to all the other companies interested in buying Activision Blizzard after its shares fell in November. At least four other companies contacted the publisher about a possible takeover. None of them are named in the SEC file. However, they just wanted to buy Blizzard in particular. Activision did not pursue this option because the company’s board felt the sale would have been too difficult.
The document also contains the terms of the contract of sale. If the deal doesn’t go through due to antitrust complications, Microsoft has agreed to pay Activision Blizzard a termination fee of up to $3 billion. A few years ago, Microsoft probably wouldn’t have given this possibility too much thought, but in 2022 the company finds itself in a very different regulatory environment. Earlier this month, NVIDIA abandoned a bid to buy ARM after the Federal Trade Commission. President Biden appointed , the current commission chair, to the position because of her experience in antitrust law. When the NVIDIA ARM deal fell through, the agency specifically noted that it was “significant” because it “represents the first abandonment of a controversial vertical merger in many years.”
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