Activision Blizzard Sees Brighter Days Ahead As Microsoft Acquisition Nears Fruition

Zinger Key Points
  • Activision Blizzard's proposed $68.7 billion acquisition by Microsoft is looking more likely to succeed.
  • "Diablo IV" has shown that it could become a hit, with over a million players reaching at least level 20 in the game during its beta test

Things finally seem to be falling into place for Activision Blizzard ATVI.

The Santa Monica, California-based video game developer behind the "Call Of Duty" franchise seems to be looking ahead to prosperous days, after several months of uncertainty following the proposed $68.7 billion acquisition by tech giant Microsoft MSFT, and the subsequent reviews from regulators.

On March 24, the U.K.'s Competition and Markets Authority (CMA) indicated that it does not anticipate any significant anticompetitive effects resulting from the deal.

See Also: Activision Blizzard Faces Privacy Invasion Allegations From Workers

"The CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK," the regulator announced.

Four days later, the Japan Fair Trade Commission said that it did not expect the merger to obstruct competition. It notified the companies that it would not issue a cease and desist order, and closed its review on the matter.

According to the Wall Street Journal, Jason Bazinet from Citigroup C now gives the deal a 70% chance of closure. That's up from his previous estimate of 50%. Meanwhile, Doug Creutz from Cowen, who had previously estimated a 30% likelihood of success three months ago, now puts the chances of the deal closing at 60%. As a result of the CMA's announcement, Activision's shares have risen over 7%, reaching their highest price since the deal was initially announced in January.

The U.K. and European Union are expected to issue their final rulings on the deal by April 26. The acquisition has already hit a roadblock in the United States, where the Federal Trade Commission (FTC) has filed a lawsuit to block the acquisition. A hearing for the FTC’s case is scheduled for early August, which is two weeks after the July 18 final deadline to close the deal specified in the merger agreement.

As per WSJ, Matt Perault, policy analyst for New Street Research, believes that the U.K. and EU’s rulings will play a significant role in the FTC’s decision on how to proceed with its own case. Microsoft is likely to prevail, he explained, citing how a settlement is "more likely than a block" because Microsoft can offer concessions that address many of regulatory concerns.

Diablo IV: Early Beta Testing Indicates Massive Success Ahead

The eagerly anticipated release of "Diablo IV" has faced multiple delays, leaving fans of the action role-playing franchise on tenterhooks. However, the beta test in March has given a promising indication that the wait might be worth it, as Activision announced that over a million players had reached at least level 20 in the game.

Andrew Uerkwitz, an analyst at Jefferies, described the figure as "impressive" in a note to clients, considering that the beta was only available to those who had pre-ordered the game and would have required at least 15 hours of gameplay to achieve that level.

Uerkwitz is so optimistic about the game's potential that he has raised his sales target for "Diablo IV" this year by 20% to 18 million units following its planned release in June. To put that into perspective, the game's predecessor, "Diablo III," sold 12 million units during its release year in 2012.

Next: How Miscommunication Over Microsoft Acquisition Led To Activision Blizzard-NetEase Split

Image: courtesy of Activision via Twitter.

Market News and Data brought to you by Benzinga APIs
Posted In: EntertainmentGamingM&ANewsTop StoriesGeneralacquisitionActivision BlizzardDiablo IVMicrosoftvideo games
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!