Berkshire owns 9.5% of Activision Blizzard shares in merger arbitrage bet

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Warren Buffett said on Saturday that Berkshire Hathaway had increased its stake in Activision Blizzard as part of a merger arbitration game, betting that Microsoft’s proposed acquisition of the video game company would close.

Berkshire now owns about 9.5% of Activision stock, Buffett said at the company’s annual meeting of shareholders.

“Once in a while, I’ll see an arbitration agreement and I’ll do it,” the Berkshire chairman and CEO said. “Once in a while it looks like the odds are in our favor, but we absolutely could lose money on this company, quite a lot of money, depending on what would happen if the deal blows up.”

In January, Microsoft announced its intention to buy Activision for $95 per share. Activision closed at $75.60 per share on Friday.

Buffett said he has bought more shares of Activision since the deal was announced because the stock is trading well below Microsoft’s offer. Buying at these levels will yield a bigger return if the trade closes.

“If the deal is done, we make money, and if the deal isn’t done, who knows what will happen,” Buffett said.

“We don’t know what the Department of Justice will do, we don’t know what the EU will do, we don’t know what 30 other jurisdictions will do. One thing we do know is that Microsoft has the money,” he said. mentioned.

In the fourth quarter of 2021, Berkshire first bought about $1 billion worth of Activision Blizzard stock, betting that the company was undervalued.

Buffett said Berkshire “had no prior knowledge” of Microsoft’s plan to buy the company when Berkshire made its initial investment.

Check out all the coverage from CNBC’s Berkshire Hathaway Annual Meeting here.

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