Warren Buffett’s Berkshire Hathaway boosts stake in Activision Blizzard, stock still down by 20% from Microsoft’s acquisition price

The Activision Blizzard investment is the latest of a series of multi-billion dollar investments by Warren Buffett’s Berkshire Hathaway this year.

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Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash.

Warren Buffett Berkshire Hathaway: Activision Blizzard, a nearly $59-billion market cap company, is back in focus. Currently trading at around $78, the Activision Blizzard stock price jumped over 3 per cent on the news of Warren Buffett’s Berkshire Hathaway buying a stake in the company. The share of Activision Blizzard, a video-gaming company, is down by 14 per cent over the last 1 year but up by 17 per cent year-to-date (YTD). The stock is still down by about 20% from Microsoft’s acquisition price of $95.00 per share.

Berkshire Hathaway now holds an expanded 9.5% stake in Activision Blizzard Inc. stock by pumping in approximately $5.6 billion. The stake is being looked upon as an arbitrage bet on the video-game maker in the midst of being acquired by Microsoft for $68.7 billion.

According to Reuters, The Activision investment is the latest of a series of multi-billion dollar investments by Berkshire this year. These include an agreement to buy insurance company Alleghany Corp for $11.6 billion, and the amassing of big stakes in oil company Chevron Corp CVX.N, Occidental Petroleum Corp OXY.Nand computer and printer maker HP Inc. Berkshire ended March with about $106 billion of cash and equivalent, a more than $40 billion drop from the end of 2021. Buffett has pledged to keep at least $30 billion on hand.

In January 2022, Microsoft Corp. (MSFT) had announced plans to acquire Activision Blizzard Inc. (ATVI), a leader in game development and interactive entertainment content publisher. This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.

Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony.

The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming. The company has studios around the world with nearly 10,000 employees.

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