Microsoft’s (NYSE: MSFT) massive buyout of one of the world’s largest gaming companies is getting some pushback from Capitol Hill. A group of four prominent senators are now urging the Federal Trade Commission (FTC) to review Microsoft’s $75 billion deal to acquire gaming giant Activision-Blizzard (NASDAQ: ATVI).
Senators Warren, Sanders, Booker, and Whitehouse all said that the deal could undermine employees’ ability to hold management accountable for alleged misconduct that happened at Activision-Blizzard. In a letter, all four senators said that the various sexual-harassment cases now ongoing against Activision could be hampered by a big merger with Microsoft. They also added that they’re worried about how further big tech consolidations would affect workers in general.
“This lack of accountability, despite shareholders, employees, and the public calling for Kotick to be held responsible for the culture he created, would be an unacceptable result of the proposed Microsoft acquisition,” read the letter sent to the FTC by the senators.
As of right now, Microsoft’s $75 billion buyout of Activision-Blizzard is still under review by the FTC. The main question for regulators is how this buyout will affect the gaming industry. If it doesn’t hinder competition that much, then the deal will likely be approved, despite its size.
This wasn’t the only piece of news to emerge surrounding Activision in recent days. Authorities are supposedly investigating the meeting between the company’s CEO, Bobby Kotick, and multiple other millionaire investors days before they placed a large bet on Activision shares. The story also broke out on Thursday afternoon, a bit after the senator letter was sent to the FTC.
The report claimed that Kotick arranged this meeting and made an unrealized profit of $59 million due to their combined options trade. Share prices jumped from around $40 to over $95 once the news of the Microsoft acquisition was announced.
Currently, the Justice Department is investigating whether the trade violates insider trading laws. According to some sources, one of the traders had information that wasn’t public at the time.
Earlier this week, a federal judge approved an $18 million settlement package between Activision and the Equal Employment Opportunity Commission, which had been looking into Activision’s employee practices since 2018.
Despite this regulatory scrutiny surrounding the gaming giant, most experts expect the deal will go on without a problem. Microsoft is required to pay Activision a fee of $3 billion should the tech giant walk away from the deal. On Activision’s end, if it chooses to bail out of the agreement, it would pay $2.3 billion.
Shares of both companies were down a couple of percentage points. Since the year began, Microsoft has been down 7.9%, while Activision-Blizzard is still up substantially following its buyout announcement.
Activision-Blizzard Company Profile
Activision Blizzard was formed in 2008 by the merger of Activision, one of the largest console video game publishers, and Blizzard, one of largest PC video game publishers. The combined firm remains one of the world’s largest video game publishers. Activision’s impressive franchise portfolio includes World of Warcraft, which boasts more than $8 billion of lifetime sales, and Call of Duty, which has sold over 175 million copies across 14 titles over 12 years. – Warrior Trading News
