Wall Street is betting that Microsoft-Activision deal will fail

Wall Street is betting that Microsoft-Activision deal will fail

Bloomberg: Activision Blizzard Inc. shareholders approved the company’s $69 billion sale to Microsoft Corp, but Wall Street is betting that Biden antitrust enforcers could unravel one of the largest mergers in US history.

Microsoft’s $95 offer is a 23% premium over Activision’s current share price, indicating investors see risk the buyout won’t close as planned. This risk premium is more than double that of Twitter Inc. following Elon Musk’s offer, and higher than most of the announced — but still pending — deals tracked by Bloomberg.

Tough-talk from President Joe Biden’s antitrust enforcers is fueling investor fears that the deal could be blocked or subject to delays even if it prevails, said Matt Perault of New Street Research. Plus, the deal will also need approval by other governments including the European Union and China.