Activision Blizzard Stock

It’s an interesting play. A few things to note:

Upside is clearly limited to the purchase price. That makes other plays perhaps more intriguing.

Downside, while unlikely, is no approval and the stock would almost certainly fall well below the current price.

The cash offer means a possible taxable event depending on the type of account, and possibly short term gains for current buyers.

Why would they not get regulatory approval?

It's a fricking video game company. What public interest is there in regulating who owns it?

Deal was approved in Saudi Arabia today, which I didn't even know needed to give approval.

I bought some shares at 79.80 today, which would be a $15 per share return if the deal goes through. I really don't know why it wouldn't, so I'm happy to sit on this.

ETA: LINK

That article is from July, and Microsoft had apparently already provided all info to the FTC at that point, so depending on when Activision complied, we should have the FTC's answer soon.

quote:

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As of right now, it’s unclear if Activision Blizzard has complied with the request. However, once that information is supplied, the 30-day countdown will begin. Afterward, the FTC can either approve, deny, or temporarily pause the deal.

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The UK deadline to respond is September 1, so that should be coming shortly also. If the FTC approves, I bet the CMA would follow soon after.

quote:

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The UK’s Competition and Markets Authority (CMA) is also investigating the deal, with a deadline of Sept. 1, 2022, to make its decision.

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I think it’s caught up in EU regulatory review right now. I’m not familiar with the process but I think it takes a few months. Have this on my list to look into deeper.

quote:

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The European Commission, which is scheduled to finish its preliminary assessment of the deal by Nov. 8, said its website was up to date. The site showed that Microsoft had not provided concessions.

Microsoft said it continues to work with the Commission on the next steps and to address any valid marketplace concerns, such as those voiced by Sony.

"Sony, as the industry leader, says it is worried about Call of Duty, but we've said we are committed to making the same game available on the same day on both Xbox and PlayStation," Microsoft said in a statement.

Companies typically do not offer remedies during the EU preliminary review when they know regulators subsequently intend to open a four-month long investigation.

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LINK

Yall remember PQEFF was like $0.18 and had a buyout offer at $0.58 and everyone said it was easy 2.5x gains? Then the buyout fell apart and the share price tanked to $0.02. I member

Looking at the options table, even with earnings coming up on 11/7 AH, and the expected range being +/- 3.42, the market makers don’t seem too willing to offer competitive bids on puts. Call spreads are competitive up to the 11/11 75 strike. Spreads are crazy for 11/11 puts, from the 69 strike (22 delta) down -> 1.04 spread that’s off a 1 cent bid! Insane! Unless you’re willing to be at/near the money, the market makers just don’t want to play on the long put side.

What does all this mean ((IMO)? The options market is assigning a relatively high probability that this deal doesn’t collapse in the near term, and the earnings event is not a primary focus area.

The only short dated put worth playing is a high delta 70 strike (near the money). Would I want the risk of owning the stock after earnings and with this deal having some question marks? Not sure, but food for thought. It would be a purely speculative bet. This one might be worth a straddle, but carefully gauge your risk tolerance beforehand.

I hope that helped, or at least added another perspective. Interesting that even on the day of earnings, the implied volatility hasn’t expanded very much, although the expected range is now +/- 4.21.

This is from yesterday.

quote:

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Meta Earns a Win Against the FTC. Microsofts Fight Comes Next. -- Barrons.com
3:26 PM ET 2/1/23 | Dow Jones

By Connor Smith


A federal judge ruled Meta Platforms can acquire virtual reality start-up Within Unlimited, The Wall Street Journal and other media outlets reported Wednesday. The Biden administration's revamped Federal Trade Commission under Chair Lina Khan has sought to block the deal as part of an effort to rein in the power of big technology firms.

The Wall Street Journal, citing a person familiar with the matter, reported U.S. District Judge Edward Davila in San Jose, Calif., denied the FTC's request to block the deal in a sealed court decision. Bloomberg, which first reported on the ruling, noted Judge Davila issued a one-week temporary restraining order on Meta closing the deal while the FTC determines if it wants to appeal.

Barron's has not obtained the sealed ruling.

Asked about the reports and if the FTC plans to appeal the decision, FTC Deputy Director of Public Affairs Peter Kaplan told Barron's, "In respect of the Court's orders, the FTC is not in a position to comment this time."

A Meta representative did not return a request seeking comment.

The FTC announced its lawsuit seeking to stop Meta's acquisition of Within Unlimited in July. The agency argued that Meta's deal for the maker of VR fitness app Supernatural was illegal, adding that Meta already owned the popular VR app Beat Saber. In a news release, FTC Bureau of Competition Deputy Director John Newman argued Meta "chose to buy market position instead of earning it on the merits." A Meta spokesperson responded at the time calling the case "based on ideology and speculation, not evidence."

The FTC's antitrust strategy faces a larger test in August, when a trial is set for its lawsuit seeking to block Microsoft's $69 billion deal to acquire Call of Duty maker Activision Blizzard (ATVI). The FTC alleged that deal would, "harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals' access to its popular content."

Activision stock pared loses in Wednesday trading following the initial Bloomberg report, though it was still flat at $76.60 around 3 p.m. eastern time. That's a steep discount to the $95 a share deal price Microsoft would pay for Activision shares if its own battle with the FTC is successful.

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I feel good on this. Not in deep but I’ve got 100 shares.

AUG $85 calls are $3.57. Deal price was quoted at ~$95, I believe?