![]() ![]() Given Microsoft CEO Satya Nadella’s success with acquisition integration in previous deals - such as LinkedIn and GitHub - a similar success was more likely with Activision. Strong integration of the two companies.The most important assumption was that the cash flows from the deal would continue to grow at Activision’s 25% average annual rate. The future cash flows from the deal discounted to the present would exceed the $69 billion purchase price by $4.4 billion, according to my calculations back then. Microsoft would likely give preference to its Xbox and gamers were more confident that Redmond would make better new games. Specifically, adding Activision’s 10% share of video gaming to Microsoft’s 23.9% slice of the pie would result in a considerable boost in its post-deal market position. Microsoft’s share of the first two markets would increase.These included the $41 billion video game publishing industry, the $81 billion gaming console market and the metaverse - which was a dream in 2022 and was estimated to grow at a 39% average annual rate to $21.7 trillion by 2030. It aimed at three potentially large markets.Here are four reasons I thought the deal could be good for Microsoft investors: That’s because regulators might be concerned that Microsoft would favor the release of Activision games on Xbox over rivals such as Sony’s PlayStation which could elicit a lawsuit to block the deal, MarketWatch reported. More specifically, Cowen analysts anticipated a mere 33% chance that the deal would be approved. Specifically, there was concern that Microsoft would use its control of popular new Activision game releases to encourage consumers to buy its Xbox console. Regulatory approval of the deal was not assured due to antitrust grounds. ![]()
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