Yahoo Finance Microsoft buying Activision is a $68.7 billion bet on the metaverse: tech analyst
Microsoft (MSFT) may have just significantly upped its standing in the future of the metaverse by spending big to gobble up gaming publisher Activision Blizzard (ATVI).
"This was a metaverse-related deal in terms of what Activision could play with its franchises," said tech analyst Dan Ives of Wedbush on Yahoo Finance Live. "I think this is going to have a ripple effect across the broader tech space, not just on the enterprise but especially on the consumer."
In a surprising move Tuesday, Microsoft said it would acquire Activision Blizzard for $95 a share. The deal, valued at $68.7 billion is Microsoft's largest takeover ever. The deal comes as Activision shares had dropped 27% in the past year before the deal amid multiple cultural controversies inside the company.
Activision Blizzard shares rose 27% to $83.28, while Microsoft fell 1.6% to $305.
When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue, behind Tencent and Sony, according to the tech giant. Microsoft will be acquiring iconic franchises like "Warcraft," "Diablo," "Overwatch," "Call of Duty" and "Candy Crush", all which have massive potential in the metaverse experts such as Ives believes.
Embattled Activison CEO Bobby Kotick will continue to lead the company but will report to Microsoft's gaming chief Phil Spender.
"The content will drive the Game Pass business (>25 million subscribers), cloud/mobile gaming, and be a gateway to the metaverse. Activision is known as one of the top publishers in the industry, with a portfolio of high-quality, cross-platform IP," said Jefferies tech analyst Brent Thill.
Thill reiterated a Buy rating and $400 price target on Microsoft.
Wedbush's Ives thinks the deal will provide a nice boost to Microsoft's bottom line over time.
"This is the right deal," Ives said.
Yahoo Finance's Ines Ferre contributed to this story.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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