Read exactly how Microsoft’s $68.7 billion deal for Activision Blizzard came together

Photo by Vjeran Pavic / The Verge

Microsoft shocked the tech and gaming world on January 18th when it announced it would acquire a gaming company for $68.7 billion. The company that is one of the most storied developers on the planet had been reeling for months from multiple scandals, including California's lawsuit accusing the company of creating a culture of constant sexual harassment.

According to a report, Phil Spencer, the CEO of Microsoft, responded to the accusations from the WSJ article two days later in an email to the staff of the Xbox.

According to the documents, he was not the only one interested in a deal.

The initial conversation about an acquisition happened between Spencer and Kotick on November 19th, just three days after the WSJ's report about the Activision Blizzard CEO and a single day after Spencer said he was deeply troubled.

Mr. Spencer asked Mr. Kotick if it would be possible to have a call with Mr. Nadella if Microsoft was interested in discussing strategic opportunities between the two companies. The next day, Microsoft CEO Satya Nadella was more explicit, indicating that Microsoft was interested in exploring a strategic combination.

You can read the whole thing over the course of ten pages, beginning on page 31, when the acquisition was announced on January 18th. The document embedded at the bottom of the article should start there. The document provides an illuminating look at the wheeling and dealing that goes into pulling a mega-acquisition together, and I have always wondered what goes on behind the scenes.

I found it interesting that they were in contact with five other companies and one individual about a deal with Microsoft. We don't know who else could have ended up owning Call of Duty because they are only named as companies A, C, D, and E. Company E, for example, said it couldn't do a full acquisition of the company, and Microsoft was aggressively pursuing its deal, getting the terms together before some other companies had.

Microsoft would be on the hook for $2 billion to $3 billion if the merger is blocked by government regulators, according to the terms of the merger agreement.

It's unusual for mergers like this to be blocked, but the recent example of the Nvidia and Arm deal is a good example. The FTC noted in a statement this week that the failed merger is the first abandonment of a litigated vertical merger in many years.

If the deal goes through, Kotick will leave the company with a huge fortune, as he stands to gain $410 million based on the price of the shares he has left. His 2.2 million stock options could be worth hundreds of millions of dollars depending on how much they cost to exercise.

The document shows that the annual release of the mega-popular series, Call of Duty: Vanguard, failed to meet its fourth quarter projections.

The board of directors of The Verge's parent company is chaired by a man who is also on the board of directors of a different company.