Activision Blizzard Trades At A 13% Discount To Microsoft's Purchase Offer; Expect That Gap To Partially Close Soon

Edward Vranic, CFA
6.54K Followers

Summary

  • ATVI received an all-cash offer from Microsoft for $95 per share. It closed at $82.31, a 13% discount to this offer.
  • Recent offers on ZNGA and ARNA saw discounts to the offer of over 10% on the day of announcement, quickly closing several percent in the following few days.
  • Based on ATVI following very similar price action on ZNGA and ARNA immediately post-offer, I believe that ATVI can return to the $86-$87 mark by the end of this week.
  • Risk tolerant investors can make the ATVI trade more lucrative and risky by purchasing call options. Risk averse investors can enhance returns by shorting long-dated $95 calls while purchasing stock.
Activision Presents The Ultimate Fan Experience, Call Of Duty XP 2016

Rich Polk/Getty Images Entertainment

Activision Blizzard, Inc. (ATVI) rose 26% on Tuesday after Microsoft Corporation (MSFT) announced that it will be purchasing the company for $95.00 per share in an all-cash deal. That 26% rise resulted in an $82.31 close, 13% below the offer price and

This article was written by

Edward Vranic, CFA
6.54K Followers
I am a private investor based out of Toronto, Canada and I have been investing since 2003. After 8 years in Corporate Finance with a Canadian Telecom company I have decided to dedicate myself full-time to the capital markets. I write on Seeking Alpha to demonstrate my financial analysis and writing skills across a variety of industries and to take advantage of any story-based trading opportunity that may arise. My passion and greatest depth of knowledge is on Canadian small cap stocks and I consider my blog posts to be some of my best work. I am interested in any freelance opportunities that may arise outside of Seeking Alpha on Canadian or American listed stocks. Currently challenging myself to do a high volume of quality analysis.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ATVI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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