Microsoft Corporation (NASDAQ: MSFT) has been given permission by a judge to proceed with its purchase of Activision Blizzard (NASDAQ: ATVI) for $75 billion, despite objections from U.S. regulators. This news has caused Activision’s shares to rise by as much as 12% on Tuesday, as investors believe the long-running saga might finally be coming to an end.
Let’s recap the journey so far: The acquisition was initially announced by Microsoft in January 2022, with an offer of $95 per share in cash for Activision, which was facing allegations of workplace misconduct at the time. This deal would allow Microsoft to expand its already sizable video game business, bringing together popular games like Call of Duty, World of Warcraft, and Candy Crush with its Xbox console.
However, the acquisition faced scrutiny from regulators, particularly the U.S. Federal Trade Commission (FTC), which tried to block the deal before it could be finalized.
Now, the moment market participants have been waiting for: U.S. District Judge Jacqueline Scott Corley has ruled that the FTC failed to demonstrate how Microsoft’s ownership of Activision would harm competition. Consequently, the U.S. government cannot currently prevent the deal from going through.
Although the deal still requires approval from antitrust authorities in the United Kingdom, there is positive news on that front as well. The U.K.’s Competition and Markets Authority has agreed to pause their court battle to allow time for negotiations and a potential resolution to their concerns about the acquisition.
Stock Market Reaction
It’s been a rollercoaster ride since Microsoft first announced its intention to acquire Activision, but now the finish line is in sight. The likelihood of Microsoft completing the purchase of Activision and shareholders receiving their payout is much higher now than it was just a day ago, and the stock market is responding positively.
At this point, the trading price of Activision is close to the deal price, so new investors may not have a significant incentive to enter the market. However, long-term investors have reason to celebrate today’s news.