The deal will also likely face tough regulatory scrutiny in the U.S., where big technology companies are being probed by regulators for their reach and influence. China, which has been sparring with the U.S. already over technology issues, will also likely review the merger.
Kotick, who has led Activision for three decades, came
under pressure to resign after an explosive report in the
Wall Street Journal last fall that tied him personally to reports of mistreatment of women and suggested that he was aware for years of sexual misconduct, including rape, at the company but didn't report it to the board. Kotick has apologized and pledged to make changes.
In an interview, Kotick said the deal has nothing to do with the controversy surrounding Activision or calls for him to step down and that Spencer reached out to him last year. A person familiar with the discussions, who was not authorized to speak publicly, said Microsoft looked at Activision's situation, given all the negative attention and pressure on Kotick, and wondered if the beleaguered CEO would be willing to do a deal.
Kotick initially didn't want to sell, according to another person familiar with the talks, and also put the word out to see if any other company would outbid Microsoft. But at that point, Kotick had little leverage with his
board amid the ongoing public scrutiny at his company.
Microsoft's bid is a 45% premium on Activision's closing price Friday. However, it's a bargain compared with the stock's performance in the first half of last year, before the sexual bias lawsuit plunged the company into crisis. The shares hit a high of more than $100 apiece in February and then lost nearly half their value by the end of the year. Microsoft shares fell about 2% Tuesday afternoon in New York.