As Microsoft gathers, Activision Blizzard drops to the lowest price since deal news

Bobby Kotick, CEO of Activision Blizzard Inc., takes to the field after the morning session of the Allen & Co. Conference in Sun Valley, Idaho, USA, on Thursday, July 13, 2017.

David Paul Morris | Bloomberg | Getty Images

Shares of game publisher Activision Blizzard fell to their lowest price on Wednesday since Microsoft announced a plan to acquire it for nearly $ 59 billion in January, a few days after Activision Blizzard posted lower-than-expected earnings in the first quarter.

Microsoft stock, meanwhile, enjoyed its best day in two months after beating expectations with its own quarterly results.

Activision Blizzard shares closed at $ 76.10 per share, down 1.3%. That’s almost 20% lower than Microsoft’s $ 95 bid per share. shares. The agreement is expected to be completed before July 2023.

It would be the largest U.S. technology transaction to date, but the growing delta suggests that some investors are more afraid than ever that the deal will fall through.

Activision Blizzard said Monday that its Activision division, which publishes Call of Duty games, continued to lose monthly active users in the first quarter. Activision released Call of Duty: Vanguard in November, and the game did not receive universally positive reviews. The company’s net bookings fell nearly 29% in the quarter, in part due to lower premium sales for the new Call of Duty game.

It’s on top of the regulatory investigation that Activision Blizzard was already facing.

“Activision Blizzard received a voluntary request for information from the SEC and a large jury summons from the DOJ, both of which appear to relate to their respective investigations into third-party trading – including persons known by Activision Blizzard’s CEO – with securities prior to its announcement. proposed transaction, “the company said in a regulatory application on April 15.

Clay Griffin, an analyst at MoffettNathanson, has a $ 95 price target on the stock that matches the acquisition price.

“There is always a non-zero probability that it will be blocked,” Griffin said. “The recent deal with Activision is really a sign of people’s concerns about what’s going on in downside scenarios.”

Griffin said the weaker-than-expected numbers on Call of Duty are bad for the basic story behind Activision should the deal break down. He expects the transaction to be completed, but said the stock would likely be valued somewhere in the mid-60s if Activision was forced to go it alone.

If the deal breaks down, it will go down, “he said. While the $ 3 billion breach fee would help” soften the blow, “Griffin said,” assessing people where an independent Activision would act in the event the deal was not approved. . “

Of the 21 analysts who have Activision Blizzard pricing targets listed on FactSet, 17 are at $ 95.

– CNBC’s Ari Levy contributed to this report.

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