Pitch: Merger arbitrage on Microsoft’s announced acquisition at $95/share. ATVI shareholders approved the transaction, antitrust approval pending. If ATVI / MSFT merger breaks, the stand-alone valuation might exceed $95, due to dominant video game franchises, lead in e-sports, and expected earnings ramp from delayed games.
Valuation: Trades at 22% spread to Microsoft’s offer. If the transaction breaks, a 20x multiple of 2024 implies a $90 price. Multiples at which EA and TTWO trade imply $120+ stock.
Exp. gain: 22% till mid-2023
Full ATVI write-up (free guest account required):