Microsoft announced on Tuesday It will buy video game giant Activision Blizzard in a $68.7 billion all-cash deal.
Shares of Activision rose nearly 37 percent in pre-market trading before being halted after the Wall Street Journal first reported the deal.
Microsoft shares fell more than 2 percent after announcement
Activision, which is known for popular games like Call of Duty and Tony Hawk’s Pro Skater, has been mired in controversy over the past several months following reports of sexual misconduct and harassment among company executives. On Monday, Activision said it fired dozens of officers after an investigation.
Under the deal, Activision CEO Bobby Kotick, who has faced calls to resign over cultural problems within his company, will remain CEO and report to Microsoft’s Xbox boss Phil Spencer.
Microsoft has become more aggressive with gaming over the past several years. It bought Minecraft maker Mojang in 2014 for $2.5 billion. And last year, Microsoft completed a $7.5 billion acquisition of game maker Bethesda.
The deal also plays into a long-term vision for Microsoft as it competes with Meta (formerly Facebook) to create technologies to create a virtual world called the Metaverse. Microsoft CEO Satya Nadella was previously the CEO of Big Tech, having publicly acknowledged the value of the Metaverse a few months before Meta CEO Mark Zuckerberg. Today, gaming is dominated by the virtual world, but it is expected that they will expand to cater to other demographics and replace online social networking.
In announcing the deal, the companies highlighted Activision’s strengths in mobile gaming, such as the popular — and lucrative — Candy Crush. He also highlighted the opportunity to cross-promote popular gaming franchises from both companies, such as Microsoft’s Halo and Activision’s World of Warcraft.