June 28, 2022

Thrive Insider

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Warren Buffett’s $1B Stake in Bobby Kotick’s Activision Blizzard

Warren Buffett’s firm, Berkshire Hathaway, purchased shares of Bobby Kotick’s iconic video game company Activision Blizzard valued at almost $1 billion during the fourth quarter of 2021. Buffett’s stock buys occurred a few weeks before Microsoft announced its intentions to acquire Activision Blizzard for $68.7 billion. 

Since the official acquisition announcement Microsoft made on Jan. 18, shares of Activision Blizzard have shot up to $81.50, which is more than a 24% increase. “Stocks go up and down for a variety of reasons,” notes CEO Bobby Kotick.

The famed investor’s firm stands to make a nice on-paper profit, thanks to the stock surge. Its 14.66 million shares of Activision Blizzard, the company Bobby Kotick has been the CEO of since its inception in 2008, are worth approximately $975 million, according to Berkshire Hathaway’s 13F filing to the Securities and Exchange Commission.

This news came as a surprise to many industry insiders since historically, Buffett has taken stakes in traditional blue-chip firms while appearing to shy away from investments in tech stocks — although recently, billionaire Buffett has been eyeing up opportunities in the tech sector. He has cited his friendship with Microsoft’s co-founder Bill Gates, who stepped down from the Berkshire Hathaway board in March 2020, as a significant reason he’s been avoiding tech investments for so long. In 2018, Buffett admitted his firm never acquired shares of Microsoft because it “would be the target of suggestions — or accusations, even — that Gates had told me something or vice versa.”  

Will Microsoft Be Able To Acquire Bobby Kotick’s Activision Blizzard? 

Bobby Kotick selling Activision Blizzard to Microsoft will be the largest tech industry deal in the history of the United States — if it happens. The biggest hurdle is that the deal needs to clear an antitrust review from the Federal Trade Commission (FTC). But if the acquisition goes through, Microsoft will become the third-largest video gaming firm by revenue in the world. 

The FTC’s regulators are looking into whether the takeover will hurt competition within the industry. Lina Khan is the FTC chair. She supports the review of big tech companies to ensure those companies are not able to leverage their dominance in one line of business to gain power in other markets.

Kotick says about Microsoft, “They’ll drive the bus on the antitrust issues. I think the thing that is obvious to me is that when you look at the competition, whether it’s Tencent and NetEase, and Alibaba or Sony, or Amazon, Apple, Google, Facebook, Netflix, then you start looking at like, the second part of competition and content, and you realize whether it’s Roblox or Minecraft, or the variety of other sorts of platforms that are becoming available for content creators, I think there’s more competition than we’ve ever seen for games.”

Before attempting to acquire Activision in an all-cash deal, Microsoft’s other significant buyout was the $17 billion it spent on Nuance Communications Inc., a transcription software company. That deal was approved in the summer of 2021 by the United States and European Union officials. However, it is still being reviewed by the United Kingdom’s Competition and Markets Authority. 

Both Microsoft and Activision Blizzard set a June 2023 deadline to complete the transaction. If and when the deal is finalized, Bobby Kotick is expected to step down and leave the video game holding company he created in college. Kotick will reportedly walk away with a $390 million payout.