Although Microsoft (MSFT-US) may still be blocked by antitrust regulators and abandon the acquisition of Activision Blizzard (ATVI-US), because Activision Blizzard’s current stock price is much cheaper than Microsoft’s all-cash acquisition price (US$95 per share) , which impressed the broker Wedbush and included it in the “Best Choice” list.
Activision Blizzard rose 1.68% on Thursday to close at $75.19 per share. If any investor buys at this price, if Microsoft succeeds in the acquisition, then the investor will earn a net profit of $19.81 per share, and if the transaction fails, they will want to hold on. Wedbush analyst Michael Pachter reported Thursday that he expects the deal to close in the next few months.
Shares fell after news outlet Politico reported last week that 3 the Federal Trade Commission (FTC) may challenge the deal.
“The key to regulatory scrutiny will be whether consumers will be disadvantaged by the acquisition. We believe the transaction is actually beneficial to consumers because of broader access to high-quality video game content through more diverse monetization methods ,” wrote Pachter.
Sony is the biggest opponent of the deal. They argue that after Microsoft has acquired key games in the past, it will make subsequent games exclusive to the Microsoft platform.
Pachter has an Outperform rating on Activision Blizzard stock with a $95 price target. He believes that Microsoft will commit to maintaining the status quo, so that Activision Blizzard’s games will continue to be suitable for Sony’s PlayStation gaming platform.
Coincidentally, Barron’s also reiterated its bullish view on Activision Blizzard last week, as the company’s fundamental business outlook has improved, antitrust concerns appear to be overblown, and the current stock price is quite attractive. Many Wall Street analysts have also raised their ratings on Activision Blizzard in recent weeks, citing improvements in the company’s distribution pipeline.
“If we’re right, and Microsoft is committing to a legally binding agreement to maintain the status quo of content availability, then regulators can’t argue that its merger is anticompetitive.”
“Furthermore, in an industry worth about $200 billion, the combined market share of these two companies will be just over 10%, and the top two competitors are from overseas, Tencent in China and Sony in Japan. ,” wrote Pachter.
