MSFT Analysis: Will Microsoft Rally Now the Acquisition Is Off the Table?


Microsoft is one of the world’s first-ever ‘big tech’ giants in that it became a conglomerate in computer software, which began to power the world far before any of its competitors.

Nowadays, the company’s operating system dominates the entire world’s corporate computing and almost all private homes.

Its founder, Bill Gates, is a polarizer of opinion and has a similar public standing as his modern-day nemesis, Elon Musk but with almost completely opposing views and interests.

Love or loathe Mr Gates or his enormous technology empire, it is a force to be reckoned with and one of the world’s most stable, highly capitalized tech stocks.

Today, however, there is more than a degree of volatility in Microsoft stock, and the surprising element is that the price has gone up quite sharply, finishing the US trading session yesterday at $331, considerably up from the $326 it stood at by 10.00 am the same day.

Indicative pricing only

What is perhaps most interesting is that the rise in the value of Microsoft stock yesterday, which means that it starts today’s trading at its second highest point in five days, and 7.24% higher than this time last month, has taken place on the same day as the US Federal Trade Commission finally blocked the proposed acquisition of video game giant Activision Blizzard.

The government authority took this step because it considered a potential acquisition by Microsoft of Activision Blizzard to be contrary to the interest of healthy competition, deeming it the largest video game company in the entire history of video gaming and a potential antitrust risk due to its proposed size.

Microsoft Corporation had agreed to pay $69 billion to acquire Activision Blizzard, and this deal has been on the table for some time now.

Perhaps the interest in Microsoft's commercial might that has been a factor in driving up the value of its stock during the course of the unveiling of the news regarding this deal is that Microsoft is so massive and has so much commercial power and influence that the Federal Trade Commission’s blocking of the deal may not amount to much long term.

What is critical to note is that the blocking by the Federal Trade Commission is temporary and could be overturned at some point in the near future.

One of the anti-monopolistic measures taken by the Federal Trade Commission focuses on its view that a merger between Microsoft and Activision Blizzard would give the Microsoft XBOX exclusive access to Activision games, which would marginalize the market share available to the Sony Playstation and all Nintendo products.

Given the temporary nature of blocking the merger and the might and influence of Microsoft, it is anyone’s guess whether this will be back on the table again.

That may be what the markets are considering. Let’s see if this opens again – after all, Microsoft doesn’t just enter into huge multi-billion dollar acquisition negotiations without its highly experienced lawyers checking every possibility.

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