What Happens To My Activision Stock When Microsoft Buys It?

Alright, let’s cut to the chase. When Microsoft acquires Activision Blizzard, your Activision stock essentially transforms. You’ll likely receive cash for each share you own, according to the terms of the merger agreement. Think of it as cashing out your chips at the end of a successful casino night – only this time, the casino is a multi-billion dollar gaming empire and the payout is predetermined.

Understanding the Acquisition’s Impact on Your Activision Stock

The acquisition process isn’t as simple as snapping your fingers. It involves several key steps, each impacting your investment in Activision. Let’s dive into what to expect.

The Merger Agreement: Your Investment’s Blueprint

The merger agreement is the Holy Grail of information regarding the acquisition. It outlines the specifics of the deal, including the price per share Microsoft is offering for Activision stock. This is the foundation upon which everything else rests. Pay close attention to this document!

The Tender Offer: Microsoft’s Invitation to Sell

Following the merger agreement, Microsoft typically initiates a tender offer. This is a public invitation to Activision shareholders to sell their shares to Microsoft at the agreed-upon price. You, as a shareholder, have the option to accept or reject this offer.

• Accepting the Tender Offer: If you accept, you’ll tender your shares, and in return, you’ll receive the agreed-upon cash amount per share.
• Rejecting the Tender Offer: You can choose to hold onto your shares. However, if the acquisition is successful and Microsoft acquires a significant majority of Activision’s shares (usually above 90%), they can initiate a short-form merger or squeeze-out. In this scenario, you’d still be forced to sell your shares to Microsoft at the same agreed-upon price. So, ultimately, holding out usually doesn’t change the final outcome.

The Delisting: Goodbye Activision Stock

Once the acquisition is complete, Activision Blizzard (ATVI) will be delisted from the stock exchange. This means you can no longer buy or sell Activision stock on the public market. Your shares will be converted to cash if you haven’t already tendered them during the tender offer period.

Tax Implications: Don’t Forget Uncle Sam

Selling your Activision shares will likely trigger capital gains taxes. The difference between the price you originally paid for the shares and the amount you receive from Microsoft will be considered a capital gain (or loss). It’s crucial to consult with a tax professional to understand the specific tax implications for your situation.

Frequently Asked Questions (FAQs)

Let’s address some common questions investors have about the Microsoft-Activision acquisition and its effect on their stock.

FAQ 1: What if the deal falls through? What happens to my stock then?

If the acquisition fails to materialize, Activision stock would likely experience a significant price drop. The market had already priced in the acquisition’s likelihood, so its failure would disappoint investors. The extent of the drop would depend on the reasons for the deal’s collapse and the overall market sentiment. Your stock will remain ATVI and you can keep holding it or sell it.

FAQ 2: When will I receive the cash for my shares?

The timing depends on the specifics of the acquisition process and your broker. Typically, after you tender your shares, it takes a few business days to a couple of weeks to receive the cash in your brokerage account.

FAQ 3: Will I receive the same price per share regardless of when I tender my shares?

Generally, yes. The price per share is fixed in the merger agreement. However, it’s essential to tender your shares before the deadline specified in the tender offer to ensure you receive the payment promptly. If you are forced to sell because you didn’t tender them, it will be the same price per share based on the initial agreement.

FAQ 4: Can I still buy or sell Activision stock now?

Yes, you can still trade Activision stock until the acquisition is finalized and the stock is delisted. However, remember that the price is primarily driven by the expected acquisition price, so there’s limited potential for significant gains (or losses) unless the deal faces major uncertainty.

FAQ 5: What are the risks associated with holding Activision stock until the very end?

The primary risk is the possibility of the acquisition being delayed or terminated. While unlikely at this stage for Microsoft and Activision, any uncertainty could lead to price volatility. Furthermore, there’s a small risk of complications during the squeeze-out phase if you haven’t tendered your shares, although you will get the same price per share agreed upon.

FAQ 6: How will this acquisition affect the gaming industry?

The Microsoft-Activision merger is a seismic shift in the gaming landscape. It consolidates power in the hands of Microsoft, giving them access to Activision’s vast library of popular game franchises like Call of Duty, World of Warcraft, and Candy Crush. This could lead to more exclusive content, new gaming platforms, and increased competition for other gaming giants like Sony.

FAQ 7: What happens to Activision Blizzard employees after the acquisition?

The acquisition’s impact on Activision Blizzard employees is a major concern. Microsoft has stated its intention to retain most Activision Blizzard employees, but there’s always the possibility of restructuring and potential layoffs as the two companies integrate.

FAQ 8: Will Microsoft change the way Activision Blizzard games are developed or distributed?

Microsoft is likely to leverage Activision’s games to boost its Xbox Game Pass subscription service. We may see more Activision titles becoming available on Game Pass, potentially at the expense of traditional game sales. It’s also possible that Microsoft will invest in new technologies and development strategies to enhance Activision’s games.

FAQ 9: What if I hold my Activision stock in a retirement account (IRA, 401k)?

The acquisition process is the same regardless of where you hold your stock. However, the tax implications will differ. If the stock is held in a tax-advantaged retirement account, the capital gains taxes will be deferred until you withdraw the funds during retirement. Consult with your financial advisor for personalized advice.

FAQ 10: How do I tender my shares?

Your brokerage firm will provide instructions on how to tender your shares. Typically, you can do this online through your brokerage account. Make sure to follow the instructions carefully and meet the specified deadline.

FAQ 11: Where can I find the official information about the merger agreement and tender offer?

The official documents are usually filed with the Securities and Exchange Commission (SEC). You can find them on the SEC’s EDGAR database or on Microsoft’s and Activision’s investor relations websites.

FAQ 12: Should I seek professional financial advice?

Absolutely. This information is for general knowledge only and should not be considered financial advice. Consulting with a qualified financial advisor is crucial to determine the best course of action based on your individual financial situation, risk tolerance, and investment goals. They can help you navigate the tax implications and make informed decisions about your investment portfolio.

In conclusion, the Microsoft acquisition of Activision Blizzard will result in you likely receiving cash for your ATVI shares. Stay informed, consult with professionals when needed, and prepare for the next chapter in the gaming industry. It’s going to be a wild ride!