Warren Buffet Bets on Microsoft – Activision Blizzard Deal

Berkshire Hathaway, the conglomerate owned by Warren Buffet increased its holdings of Activision Blizzard in the second quarter of 2022. 

According to a regulatory filing filed on Monday, Berkshire increased its holdings of Activision Blizzard to 68.4 million shares, worth an estimated 4.3 billion. Previously, Berkshire Hathaway owned a stake of 64.3 million shares.  

Back in January, Microsoft agreed to purchase Activision Blizzard for 68.7 Billion dollars, or 95 a share. A significant premium to the current stock price of 80.35. If the deal goes through, all ATVI shares would be purchased at that price from their owners and Microsoft would become the sole owner of Activision Blizzard.

Warren Buffet is betting on the deal going through as he continues to increase his stake on the video game publisher. Buffet currently owns over 9.5% of Activision and could see large returns from the deal going through. Buffets investment in ATVI is called a merger arbitrage, where investment decisions follow a potential merger or acquisition and where investors seek to gain on these deals. 

Capital.com spoke with Analyst Edward Moya for OANDA on Berkshire Hathaway’s arbitrage play:

“Each time Berkshire Hathaway increases their holdings with Activision shares, it signals they are growing more confident Microsoft will close on this acquisition,” he continued. “It’s a straightforward deal, and Microsoft shares should be pricing in this deal already.”

Is is unknown when the deal will close, but is expected to be finalized by Microsoft’s fiscal year that ends June 2023 at the latest. Multiple countries are currently reviewing Microsoft’s proposal to acquire Activision including Brazil, where a spat between Microsoft and Sony is currently ongoing. Sony claims that Microsofts acquisition will give it an unfair advantage through Game Pass and streaming. Microsoft accused Sony of paying developers to block their games from ever being added to Xbox Game Pass. 

Some suggest that the deal could close as soon as the end of this year. Wedbush Securities Video Game Analyst Michael Pachter suggests that the deal could close as late as January 15, citing few reasons for the FTC to block the acquisition. 

It seems likely that Microsoft will be allowed to buy Activision Blizzard, and it will likely be soon.