Microsoft is paying nearly $70 billion for Activision Blizzard, maker of Candy Crush and Call of Duty, as it seeks an edge in fierce competition in mobile gaming and VR technology.
The $68.7 billion deal will transform Microsoft, maker of the Xbox gaming system, into one of the world’s largest video game companies and help it compete with technology rivals like Meta, formerly Facebook, in creating immersive virtual worlds for both work, and to play in.
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If the deal survives scrutiny from U.S. and European regulators in the coming months, it could also be one of the biggest technology acquisitions in history. In 2016, Dell bought data storage company EMC for about $60 billion.
Activision has been facing allegations of misconduct and unequal pay for months, and Microsoft CEO Satya Nadella said on a conference call with investors on Tuesday.
“The culture of our organization is my number one priority,” Nadella said, adding that “it’s critical for Activision Blizzard to live up to its commitment to improving culture in the workplace.”
Last year, Activision reported that the Securities and Exchange Commission was investigating complaints of workplace discrimination. The move comes after California sued the Santa Monica company in July, citing a culture of “fraternity boys” that has become “a breeding ground for harassment and discrimination against women.”
Activision CEO Bobby Kotick will retain his position, and he and his team will continue to focus on efforts to further strengthen the company’s culture and accelerate business growth.
Wall Street saw the acquisition as a big win for Activision Blizzard Inc., and the stock soared 27% in early trading on Tuesday, offsetting losses in the past six months after a discrimination lawsuit was filed in California. Microsoft shares fell less than 1%.
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Microsoft spent $7.5 billion last year to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, behind popular video games The Elder Scrolls, Doom and Fallout.
Microsoft, based in Redmond, Washington, said both acquisitions will help improve subscriptions to Xbox Game Pass games.
Founded in 1979 by ex-Atari Inc. employees, Activision was behind games like Guitar Hero and the World of Warcraft franchise. Kotick has been CEO since 1991.
Microsoft said it expects the deal to close in the upcoming fiscal year 2023, which begins in July. The Activision business unit will then report to Phil Spencer, who ran the Microsoft Xbox division and will now be the CEO of Microsoft Gaming.