By Nathalie Voit

Big tech giant Microsoft plans to buy Activision Blizzard, the world’s third-largest videogame company by revenue. The move follows a drawn-out public investigation into Activision Blizzard by California regulators that has slumped shares of the company since July, ZeroHedge first reported on Jan. 18.

The all-cash deal, valued at $68.7 billion, will be the company’s largest acquisition to date if completed. The deal would also broadly expand Microsoft’s already extensive foray into the lucrative gaming industry, adding such popular franchises like World of Warcraft, Call of Duty, and Candy Crush onto its gaming repertoire. The company already owns heavyweights like videogame console brand Xbox and games Minecraft and Doom.

Shares in the company have been lagging by nearly 30% since the lawsuit against Activision was first announced in July. The stock surged nearly 40% in premarket trading Tuesday after news broke out that the company was on the verge of finalizing a deal with Microsoft, ZeroHedge said.

Meanwhile, Microsoft’s shares slid over 2% as of 2 p.m. ET, while shares of Activision have now settled around +25%.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Microsoft CEO Satya Nadella in an announcement.

“We’re investing deeply in world-class content, community, and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive, and accessible to all.”

Microsoft said it would keep on Bobby Kotick as the CEO of Activision Blizzard following the deal. According to the announcement, Kotick will report to Microsoft Gaming chief Phil Spencer.

“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” Spencer said. “Together, we will build a future where people can play the games they want, virtually anywhere they want.”

Microsoft will acquire Activision for $95 a share, a premium of about 45% over the company’s previous closing price, according to ZeroHedge. The deal follows a record year for the booming gaming market, which in 2021 generated an estimated $180.3 billion in global revenue, according to games and e-sports analytics firm Newzoo.

Sales in the industry were propped up by the COVID-19 pandemic, which saw an additional 32 million Americans embracing the pastime in 2020 than in 2018, according to a study from NPD Group.

Overall, consumer spending in the industry totaled $13.3 billion in the third quarter of 2021, a jump of 7% from Q3 2020 levels and the highest third-quarter spend in history, NPD Group said in November.

Microsoft’s upcoming acquisition will allow the tech giant to capitalize on all these positive trends.

“Activision Blizzard has nearly 400 million monthly active players across 190 countries today. That reach builds on the strength of our own gaming community, from Minecraft and Xbox network to Game Pass,” said Nadella on Tuesday at Microsoft and Activision Blizzard’s investor call.

“Together with Activision Blizzard, we will have one of the largest and most engaged communities in all of entertainment,” he added.

Click here to access a transcript of Microsoft and Activision Blizzard’s conference call.