Starting a new thread for this since the other one is a few months old.
So this was mentioned today and I took a look at it. It seems like there is a high likelihood of the merger being blocked by the FTC being priced into the stock. I’m looking into doing a possible options play on this, but it’s hard to say where the stock would trade at in the event that the merger is blocked.
Any opinions (along w/ justification) as to where this stock will go to if the merger is blocked?
FTC is worried about user data and privacy. Microsoft has Azure and its systems are as safe as any other gov cloud system. Don’t waste your money on this. Done deal.
This is NOT a done deal. The stock is trading like 20% below the acquisition price. That is a monster merger arb, which means that there’s a lot of risk that the deal falls through priced into it.
I think the fact that Berkshire Hathaway having a 9.5 percent stake in it leads me to believe it’s probably a done deal. I mean we are talking about one of the most intelligent investors in our lifetime bet and a moderately large stake at that sure he can take an L like the best of us. But usually if they get in big it’s probably a good sign. I’d say this ticks upward on this news. And would lean towards merger being successful.
Agree with this, although it should be noted the first initial buy in ATVI was due to value Berskshire saw in ATVI before the merger. ATVI still makes good money despite all the setbacks they were facing (delay of some games, bad press, employee walk out, etc).
There were already a slew of articles where legal experts weighed in that there is not much precedent for any government agency to block this deal.
Personally given where the market is, I may actually go park a nice chunk of my money in ATVI. At its current price point it is a 25% upside. Not sure we can expect SPY or another index to make that sort of recovery in the 6-8 months it will take to complete the acquisition.
Just gonna plug the Buffett article here for record-keeping and tracking.
neat that they were already building a stake in Q4 2021.
In the fourth quarter of 2021, Berkshire first purchased about $1 billion worth of Activision Blizzard stock, in a bet the company was undervalued.
I took a few 05/20 80c for 0.35 the other day… I hope this gaps up heh
The stock price was around $65 before Microsoft announced its acquisition. I would see it going below that if the merger didn’t go through because ATVI’s financials have been getting worse and tech stocks are down industry-wide.
There’s the huge gap that was created from the original acquisition news. If the market sinks more this week I think we could potentially be looking at filling that gap?
If we fall back to the $65-$66 range, heck even I would buy some shares in anticipation of the $95 buyout price.
Would this be that arbitrage thing I’ve heard so much about?
In terms of FTC blocking this, are there any recent comparable examples?
Napkin math says Warren increased stake from 1bb to 5.5bb after the announcement.
Is June 2023 still the merger deadline?
Did a bit more digging. This seems to be the biggest pushback, from some members of The Squad.
Their argument doesn’t seem to be based on antitrust so I don’t see it holding much weight, provided, however, that Lina Khan has only been FTC chair for a year, so we don’t have much to go off of in terms of her history other than she was approved by a bipartisan vote “specifically because of her influential anti-Amazon views”
“We are deeply concerned about consolidation in the tech industry and its impact on workers, and this proposed merger has already hurt workers at Activision Blizzard in their fight for a stable job and a safe working environment.”
“The FTC should consider the history described above when assessing the anticompetitive effects that this gigantic merger may produce.”
from
It’s not so much a deadline as it is an estimated date. Could be sooner, could be later.
Keep in mind that this deal needs regulatory approval from the EU and possibly other countries that msft does business in as well, which can extend the timeline and increase the chances of it being shot down.
Does it need EU approval for merger to go through? Or does it just EU approval for MSFT/ATVI to continue to operate those aspects of their business operations in EU countries. I’d think both being US based companies merger could proceed with US regulatory approval. But then they would licensing to offer these products in the EU
I think large mergers need approval from multiple countries’ regulators. If any one says no then it cannot proceed.
If both countries do business in those countries then it needs their approval.
I’m not sure why this would be the case though. You may be right. However, I don’t know how EU could block agreed upon merger of 2 US companies. FTC yes I can understand. But not sure EU has anything or any bearing on this unless it’s post merger business and regulation.
EU is going to govern any product sales or product development in that region. From my memory ATVI has a sizeable operation in Europe, mostly through Blizzard.
Not to mention all the digital sales that MSFT and ATVI both do in EU, and MSFT cloud services in the region.
Not sure why this makes the news or is a thing but apparently Saudi Arabia approves of the MSFT ATVI deal. This doesn’t seem to mean much of anything fundamentally but yeah idk just sharing this update here
This occured yesterday which may explain why ATVI fell but the main lead character designer for the new game, Overwatch 2, left Blizzard shortly before the game releases on October 4th, 2022. Overwatch 2’s lead character designer has left the company - Polygon
ATVI down 4% afterhours today on this news https://www.reddit.com/r/stocks/comments/z33y81/ftc_likely_to_file_lawsuit_to_block_microsofts_69/
A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, the report said, adding that the FTC staff reviewing the deal are skeptical of the companies’ arguments.
Any experts on this? Is this a nothingburger AKA buying opportunity or is it too shaky right now?
