MICROSOFT BUY ACTIVISION COMPANY

• Microsoft will buy computer game giant Activision Blizzard in an exceedingly $68.7 billion all-cash deal.

• Activision makes popular game franchises like Call of Duty

• Activision has been mired in controversy in recent months thanks to allegations of harassment and misconduct among company executives.

Microsoft announced Tuesday it'll buy game giant Activision Blizzard in an exceedingly $68.7 billion all-cash deal.

The price means Microsoft can pay $95 per share for Activision. Activision’s stock ended the day up over 25%, closing at $82.31 per share on Tuesday. Microsoft’s shares closed down over 2%. this could be Microsoft’s largest acquisition up to now, followed by its purchase of LinkedIn in 2016 for $26.2 billion.

Activision, which is thought for popular games like Call of Duty and Tony Hawk’s Pro Skater, has been mired in controversy for the last several months after reports of sexual misconduct and harassment among the company’s executives. On Monday, Activision said it fired dozens of executives following an investigation.

Under the deal, Activision CEO Bobby Kotick, who has faced calls to resign over the cultural problems within his company, will remain CEO during the transition. Microsoft said Activision as an organization will report back to Microsoft’s Xbox boss Phil Spencer after the deal closes, implying Kotick could depart after the transition. The Wall Street Journal reported Tuesday afternoon Kotick is anticipated to step down after the deal closes.

Microsoft said it expects to shut the deal in its fiscal 2023. However, U.S. regulators have signaled they're going to be much more aggressive in evaluating large acquisitions, especially within the tech industry, so there’s an opportunity the deal dies under government review.

Microsoft has gotten more aggressive with gaming over the past several years. It bought Minecraft maker Mojang for $2.5 billion in 2014. And last year, Microsoft completed a $7.5 billion acquisition of game maker Bethesda.

The deal also plays into a long-term vision for Microsoft because it competes with Meta (formerly Facebook) to make technologies to make a virtual world called the metaverse. In fact, Microsoft CEO Satya Nadella was the primary Big Tech CEO to publicly acknowledge the worth of the metaverse, months before Meta CEO Mark Zuckerberg. Today, virtual worlds are dominated by gaming, but the hope is that they expand to cater to other demographics and replace plenty of traditional social networking activity online.

“When we predict about our vision for what a metaverse may be, we believe there won’t be one, centralized metaverse,” Nadella said on a call Tuesday morning where he discussed the deal. which means Nadella sees a chance for several software makers to form many various virtual worlds within the future, rather than one dominant company controlling most of the activity.

Still, Microsoft doesn't yet have a reasonable, consumer-grade computer game headset that may be necessary to meet the vision for the metaverse. Microsoft does sell an augmented reality headset called HoloLens, but that device paints digital items on top of the 000 worlds. It’s not a totally immersive experience and is generally used for business applications.

In an interview with CNBC’s Becky Quick on “Squawk on the road,” Kotick said the deal came through after he realized Microsoft had the technology to push Activision forward within the burgeoning competition between tech companies to create the metaverse. within the same interview, Spencer said talks about a buying deal that began between the 2 companies late last year.

That said, both companies focused on the current in announcing the deal, with a highlight on Activision’s strength in mobile gaming. as an example, Activision owns Candy Crush, one of the foremost popular and lucrative mobile games around. (Activision bought Candy Crush’s publisher, King, for $5.9 billion in 2016.) They also highlighted the chance to cross-promote popular gaming franchises from both companies, like Microsoft’s Halo and Activision’s World of Warcraft.

“The last two years, particularly, have shown how critical games are to helping people maintain a way of community and belonging, even once they are apart,” Nadella said on a call Tuesday morning following the announcement of the deal. He added that 3 billion people around the world play video games, a touch at the full market he sees Microsoft going in.