As Microsoft's acquisition of Activision Blizzard takes a further stride, Warren Buffet, according to U.S. regulatory reports, significantly reduced his holdings in Activision Blizzard on July 17, slashing his stake from 6.7% since last quarter to just 1.9%.
On Monday, the Microsoft-Activision deal, riddled with hurdles, welcomed fresh progress as the UK's Competition Appeal Tribunal paved the way for the two corporations with an alternative to the UK's veto.
In a hearing held in London, the UK's Competition Appeal Tribunal stated that after unprecedented new discussions about remedial measures last week, the case contesting the proposed UK regulatory ban can be "conditionally" postponed.
Both the Competition and Markets Authority (CMA) in the UK and Microsoft sought to defer the case, as the CMA surprisingly announced last week its openness to discuss new remedies.
Previously, the Federal Trade Commission (FTC) in the U.S., which also tried to prevent this acquisition, failed to win its appeal.
Following last week's failed FTC appeal, a dramatic event of Microsoft reaching a ten-year licensing agreement with rival Sony Group on "Call of Duty", the CMA stands as the only regulatory body obstructing the transaction. At present, the deal has been approved by regulators in 39 countries or regions.
While neither side detailed the steps Microsoft took this time to gain the support of UK regulators, a lawyer from CMA mentioned in the hearing that the negotiations had been "productive".
The proposal from Microsoft made stakeholders "truly believe" that their concerns could be addressed. Both companies are considering relinquishing partial control of the cloud gaming business in the UK to facilitate the transaction.
Despite the "last obstacle" no longer worrying the two parties, according to media reports citing insiders after U.S. stock trading on Monday, the deal is nearing completion but is unlikely to conclude by the deadline of Tuesday, July 18. The insiders said both companies do not plan to abandon the deal and will continue seeking the final regulatory approval needed to complete the transaction.
On Monday, Activision Blizzard shares soared by 3.49% to $93.21, hitting a two-year high, very close to the $95 per share price that Microsoft proposed for the acquisition at the beginning of 2022. Microsoft shares saw a slight increase of 0.14%, closing at $345.73.
Buffet Once Again Massively Sells Activision Blizzard Stocks In January 2022, Microsoft announced it would acquire Activision Blizzard for $68.7 billion at a price of $95 per share. Berkshire Hathaway had already positioned itself in the company's stock before Microsoft's acquisition of Activision Blizzard.
At the shareholders' meeting at the end of April last year, Buffet discussed Microsoft's acquisition of Activision Blizzard. He stated that after Microsoft announced a nearly $69 billion all-cash acquisition of Activision Blizzard in mid-January, he proactively increased Berkshire's stake in Activision Blizzard from about 2% to 9.5%.
Buffet said Berkshire's stake in Activision Blizzard was about 9.5% of its outstanding shares. If it crosses the 10% threshold, it would need to report to the SEC, and they might cross that line. Buffet mentioned that he increased his stake in Activision Blizzard after learning of Microsoft's acquisition because he felt there was a significant discrepancy between Activision Blizzard's share price of around $60 before the announcement and Microsoft's acquisition price of $95 per share, making it a worthy investment. He knew Microsoft had enough money to complete the acquisition, and if the deal went through, Berkshire would make a lot of money. He was betting on the successful completion of the transaction:
"Microsoft wants to buy Activision Blizzard for $95 a share, and they certainly have the money to do so. Sometimes I see such arbitrage opportunities in mergers and acquisitions, and I will act on them. Sometimes it seems the opportunity is in our favor. If the deal is successful, we can make money. If the deal is not successful, who knows what will happen."
By the end of last year, the deal faced considerable pushback from regulatory bodies in the U.S., EU, and UK, leading to much uncertainty. In the fourth quarter of 2022, Berkshire sold 7.4 million Activision Blizzard shares, accounting for 12% of its holdings. Berkshire Hathaway's stake in Activision Blizzard also fell to 6.7% before the recent massive reduction.
