Microsoft announced its intention to acquire Activision Blizzard on January 18th, 2022, a process that is expected to take a year to complete after jumping through numerous regulatory hoops. As part of that regulatory effort, Activision has filed documents with the US Securities and Exchange Commission (the SEC) to outline the terms of the merger (via The Verge). The 100+ page document includes details on financing and tax implications of the deal, intricacies of an Activision stockholders meeting needed to approve the deal, financial forecasts, details on what happens if the deal does not go through, and more details on the terms.
But perhaps the most interesting part of the document is titled "Background of the Merger." Starting at page 31, the background details over ten pages the steps leading up to Microsoft's bid to acquire Activision. The deal was first discussed by Activision CEO Bobby Kotick and Xbox chief Phil Spencer on November 19th, 2021, and again with Kotick and Microsoft CEO Satya Nadella the next day.
Activision has been embroiled in controversies regarding its treatment of employees, including accusations of sexual harassment that came to light in a Wall Street Journal report only days before the initial acquisition discussions. The background section reveals that the initial discussions began "in the course of a conversation on a different topic," which well could have been Microsoft's reactions to the complaints about Activision. Spencer had only the day before released an email to Xbox employees, decrying the alleged behavior at Activision.
What isn't said in the background is if Microsoft had plans already in place to pursue an acquisition, or how much of a part Activision's suddenly more vulnerable position made it a target. Microsoft has been on a video game buying spree lately, acquiring ZeniMax Media including Bethesda Softworks in a deal concluding last March, and after that deal Spencer said they were still not done.
The background section also reveals that Microsoft was not the only pursuer of Activision, with as many as four other companies and one individual expressing interest, all after Microsoft had made clear its intentions.
The Microsoft - Activision deal still has a long road ahead, especially in light of the US Federal Trade Commission's (FTC) more aggressive stance in regard to tech company acquisitions. The FTC will reportedly be handling an antitrust review of the deal, and Microsoft has already begun jockeying to appear in a good light in front of any scrutiny, releasing plans to make its app stores more open.
While we can expect any almost $70 billion dollar deal to generate scrutiny, Microsoft will have its hands full navigating through regulatory hurdles before this deal is done.