One of the big headlines last week was the acquisition of Activision Blizzard, Inc. ATVI by Microsoft Corporation MSFT. The deal marks the largest in Microsoft’s history and will create the third-largest video game company by revenue if approved.
Investors who bet on Activision when it merged two of the biggest names in the industry have previously enjoyed strong returns.
What Happened: Video game publisher Activision was a strong player in the console space but was seeking to add growth and exposure to the PC segment, which led to a merger to create a video game giant.
On July 8, 2008, Activision agreed to merge with Vivendi Games in an $18.9 billion deal. The deal brought the Blizzard portfolio of games that included “World of Warcraft,” “Starcraft” and “Diablo” under the Activision Blizzard umbrella.
“World of Warcraft” was the number one subscription-based MMORPG (massively-multiplayer online role-playing game) at the time and was the fastest-selling PC game in the U.S. when it was released in 2004.
“We have created the world leader in online and console games with this transaction and the combined strengths of the two businesses offer immense growth potential,” Vivendi CEO Jean-Bernard Levy said at the time of the deal.
Vivendi held a 52% stake in the new Activision Blizzard company after the deal. Years later, Activision Blizzard would buy back shares from Vivendi.
Activision Blizzard is being acquired by Microsoft for $68.7 billion, or $95 a share. The deal will bring the iconic Activision and Blizzard games to the owner of the Xbox console and other game studios.
Investing $1,000: Investors and gamers who recognized the potential value of the combined Activision Blizzard company and its portfolio of games have seen a strong return over the past 13 1/2 years.
A $1,000 investment in ATVI shares on July 8, 2008, could have purchased 63 shares based on a high price of $15.87. Those 63 shares would be worth $5,038.11 today based on a price of $79.97 for ATVI shares.
Investors would have realized a gain of 404% in their investment of ATVI shares from the time of the merger with Blizzard, representing an average annual gain of 29.9%.
The investment could be worth even more if the deal with Microsoft is approved and shares are bought for $95 each by the tech giant.
Photo: World of Warcraft, courtesy Activision Blizzard
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