98% of Activision Blizzard shareholders have voted in favour of Microsoft’s buyout but many outside investors think the deal won’t happen.
For a brief moment it looked as if Activision Blizzard’s shareholders might actually vote against the planned Microsoft acquisition, not only because one investment group advised against it but because the current share price indicates that Wall Street does not expect the deal to go through.
The acquisition has two hurdles to clear before it goes through and it’s navigated the first one – getting the approval of shareholders – with ease.
However, it wasn’t shareholders that Wall Street was worried about, and it seems that many expect the American monopolies commission to come out against the record-breaking buyout.
Although only 2% of investors voted against the deal, they did have a legitimate point: that the current share price is much lower than it should be and so they could’ve got much more money if this had happened a year or so ago.
The recent decline of Call Of Duty and the drop in share price caused by the controversies over workplace abuse means Microsoft were able to snap Activision Blizzard for much less than they should’ve been.
At the moment though the current share price is even lower than that, at 24% less a share than what Microsoft is prepared to pay. This is apparently because speculators expect the acquisition to be blocked by the U.S. government.
To the layperson, that seems unlikely given how rarely it seems to interfere with other similar deals (Elon Musk’s buyout of Twitter is predicted to be twice as likely to happen), but other buyouts have been blocked recently, such as Nvidia’s acquisition of Arm.
President Joe Biden’s administration has been much more proactive about antitrust concerns than previous administrations and the fact the FTC (Federal Trade Commission) is handling the deal, rather than the Justice Agency, is a sign that the deal will not be given an easy ride.
Even so, some analysts think there’s little chance of the acquisition being stopped, with Bloomberg quoting the infamous Michael Pachter as saying there’s only a 10% chance of the FTC initiating a lawsuit.
He believes that it’s impossible to prove that Microsoft will create any kind of monopoly, especially when looking at the global market, where the biggest companies are Chinese, not American.
Although that in turn raises the point the deal must also be approved by regulators in Europe and China, who may have a very different point of view to the FTC.
Wall Street investors are concerned that even if the acquisition isn’t blocked outright it could be subject to so many delays and complications that Microsoft ultimately abandons it. The current deal has until June 2023 to be closed and after that Microsoft would have to make a new offer, if it hopes to continue.
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