Buffett says Berkshire Hathaway owns 9.5% stake in Activision

By Jonathan Stempel

OMAHA, Neb. (Reuters) – Warren Buffett said on Saturday that Berkshire Hathaway Inc took a 9.5% stake in Activision Blizzard Inc, and built most of that stake after Microsoft Corp agreed to buy the video game maker for $68.7 billion.

Buffett unveiled the investment at Berkshire’s annual meeting of shareholders in Omaha, Nebraska.

The investment is a bet that Microsoft could complete its proposed $95-per-share takeover of Activision, whose franchises include “Call of Duty” and “Candy Crush,” and weather the expected stringent antitrust review from the U.S. Department of Justice.

One of the portfolio managers who helps Buffett invest Berkshire’s money had amassed a roughly $1.1 billion stake in Activision late last year, but Buffett has made it clear he’s responsible for the rest.

The 9.5% stake is worth about $5.6 billion based on recent Activision shares outstanding. Buffett said Berkshire would file a report with regulators if the stake reached 10%.

“If the deal goes through, we make money, and if it doesn’t go through, who knows,” Buffett said. “But if we file this report, understand very clearly, it was Warren Buffett’s decision, and he doesn’t know what the Justice Department will do.”

Activision shares closed Friday at $75.60, 20% below Microsoft’s proposed takeover price.

This signals that some investors are still unconvinced that the merger will get the necessary approvals.

Buffett’s investing is a form of merger arbitrage and a departure from his usual practice of investing in what he sees as strong companies that the market undervalues.

Microsoft announced its intention to buy Activision on January 18.

Activision’s investment is the latest in a series of multi-billion dollar investments by Berkshire this year.

These include an agreement to buy insurance company Alleghany Corp for $11.6 billion and the acquisition of major stakes in oil company Chevron Corp, Occidental Petroleum Corp and computer and electronics maker. HP Printers Inc.

Berkshire ended March with about $106 billion in cash and cash equivalents, down more than $40 billion from the end of 2021. Buffett pledged to keep at least $30 billion on hand.

(Reporting by Jonathan Stempel in Omaha, Nebraska; Additional reporting by Megan Davies in New York; Editing by Daniel Wallis and Diane Craft)

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