Warren Buffett Reveals He’s Boosted Stake In Activision Blizzard To 9.5%

Topline

Billionaire Warren Buffett disclosed Saturday that Berkshire Hathaway now owns about 9.5% of Activision Blizzard, with the Oracle of Omaha seeking to profit on the gap between the embattled video-game company’s stock price and Microsoft’s bid to acquire it.

Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview in Omaha, Neb., on May … [+] 7, 2018. (AP Photo/Nati Harnik, File)

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Key Facts

Buffett said during Berkshire’s annual shareholder meeting that he had raised his conglomerate’s stake in Activision from 2% of the company as of the end of the year to 9.5%—worth about $5.6 billion— with the share price hovering around $80, well below Microsoft’s $95 per share offer.

Buffett said he wanted to make it clear it was his own bet, and that he didn’t want anyone to blame Berkshire investment managers Ted Weschsler or Todd Combs if the acquisition fails to win regulatory approval.

Buffett didn’t have to make public his deal arbitrage play (or “workout,” as he said it used to be described when he got started in the 1950s) – Berkshire’s 13F investment holdings filing for the first quarter has yet to be released and investors are only required to disclose large purchases outside of that when their stake in a company rises over 10%.

Microsoft announced it planned to acquire Activision in January in an all-cash transaction for roughly $69 billion, which would make Microsoft the third-largest video-gaming company by revenue once the deal closes.

Activision shares closed Friday at $75.60.

Key Background

One of Berkshire’s investment managers initially purchased about 14.7 million shares of Activision in October and November for an average cost of $77 per share, according to a February letter from Buffett’s office. Buffett said the investment was “no bonanza” and was made without prior knowledge of the upcoming deal with Microsoft.

Tangent

Activision, the largest video game company in the country, faced a reckoning last year over allegations of widespread sexual misconduct and other discriminatory practices at the company. The California Department of Fair Employment and Housing sued Activision in July after a two-year investigation, alleging executives engaged in a “frat boy” culture, and that the company allegedly denied promotions to female employees. Activision shares fell 27% after the lawsuit was announced, and again plunged in November following reports CEO Bobby Kotick knew of sexual misconduct at the company for years, though an Activision spokesperson said at the time Kotick “would not have been informed of every report of misconduct at every Activision Blizzard company, nor would he reasonably be expected to have been updated on all personnel issues.”

What To Watch For

Kotick is reportedly leaving the company in 2023, when the deal is expected to close, though the proposed acquisition is facing antitrust scrutiny from the Federal Trade Commission.

Big Number

$116.6 billion. That’s Buffett’s net worth, according to Forbes’ real-time wealth tracker, making him the sixth-richest person in the world.