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Microsoft buys game developer Activision Blizzard for $68.7 billion

The surprise acquisition will make Microsoft the third-largest gaming company in the world

Microsoft has announced plans to acquire gaming giant Activision Blizzard for $68.7 billion.

The acquisition, which is Microsoft's largest to date and will, adds a global network of studios with almost 10,000 employees to Microsoft's existing games operation. Microsoft will have 30 internal game development studios when the deal closes, making it the third-largest gaming company in the world behind Tencent and Sony,

Activision Blizzard is known for games including World of Warcraft, Diablo, and Call of Duty. These games, along with others including Overwatch and Candy Crush, will all become part of the Microsoft stable.

Formed in 2008 through the merger of Activision and Vivendi Games, Activision Blizzard has five business units: Blizzard Entertainment, King, Activision Blizzard Studios, and its e-sports operation Major League Gaming.

Microsoft said that it would also add Activision Blizzard games into its Game Pass subscription service. Activision Blizzard has nearly 400 million monthly active players enjoying its games across 190 countries.

Microsoft inherits some controversy with the acquisition. In July, the California Department of Fair Employment and Housing sued Activision Blizzard for alleged sexual harassment and employee discrmiination. This prompted several dismissals and an SEC investigation into payment discrepancies.

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Activision Blizzard CEO Bobby Kotick, who reportedly failed to inform board directors about incidents of harassment, will continue in his position. He will report to Phil Spencer, who moves from hard of Microsoft's Xbox division to CEO of the company's gaming division.

Microsoft CEO Satya Nadella implicitly acknowledged the problems in a statement describing the proposed deal. "We look forward to extending our journey to create a more diverse and inclusive culture to our new colleagues at Activision Blizzard, and ensuring all our employees can do what they love, while thriving in a safe and welcoming environment — one where everyone feels empowered to do their best work," he said.

Activision Blizzard's stock lost 31.2% between July 23, shortly after the lawsuit filing, and dropped from $83.28 to $57.29 on December 2. The company's share price jumped 32.4% from $65.39 on January 14 to $86.55 on the deal's announcement.

The companies expect the merger to close in fiscal 2023, subject to regulatory approval. 

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