Microsoft's deal to acquire Activision Blizzard stalls, traders remain optimistic

Some traders believe that Microsoft's acquisition of Activision Blizzard may finally be completed, despite the current impasse. The news comes from May 18th. Buying Activision Blizzard stock could bring significant gains, as the stock price is currently nearly 20% below the acquisition bid.

According to ITBEAR Technology Information, in recent years, U.S. regulators have paid more attention to mergers and acquisitions of large companies, especially technology companies, resulting in a longer and longer time interval between the announcement and final approval of a transaction. Risk of deal breakdown.

Investment company Accelerate Financial Technologies Inc.'s chief investment officer Julian Klimochko said: "The size of the deal, coupled with the impact of antitrust scrutiny on large technology companies, ultimately resulted in a very large spread."

In January this year, Microsoft announced its acquisition plan for Activision Blizzard, and the transaction is expected to be completed before June 30, 2023. The U.S. Federal Trade Commission (FTC), led by Chairman Lena Khan, has filed lawsuits aimed at blocking some major acquisitions. Khan has advocated closer scrutiny of mergers and acquisitions by big tech companies, arguing that tech companies can use their dominance in one area of ​​business to influence other markets.

According to Susquehanna International Average annualized transaction spreads in the United States have risen to more than 15% from about 10% at the beginning of the year, according to Group data. Investors are increasingly worried about deals falling through or being repriced, and the rising cost of holding risky positions.

The deal is widely expected to be approved, according to market strategist Cabot Henderson. According to forecasts by 32 analysts on Wall Street, 26 have set a 12-month price target for Activision Blizzard stock at $95 or higher.

Investor Warren Buffett also bought about 9.5% of Activision Blizzard's shares in order to achieve merger arbitrage. Buffett has been involved in many industries, including technology companies, in his nearly 70 years of investment experience. He once bought Red Hat Inc., which was subsequently acquired by IBM in 2019.

To sum up, although Microsoft's acquisition of Activision Blizzard faces some challenges and uncertainties, there are still some traders who are optimistic about the final completion of the deal. As the regulatory environment changes and the market becomes concerned about a failed deal, investors will need to pay close attention to Activision Blizzard stock-specific news and volatility in overall market trends.

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