Warren Buffett on Saturday mentioned Berkshire Hathaway has been growing its stake in Activision Blizzard in a merger arbitrage play, betting that Microsoft’s proposed acquisition of the online game firm will shut.
Berkshire now owns about 9.5% of Activision shares, Buffett mentioned on the firm’s annual shareholder assembly.
“Occasionally I’ll see an arbitrage deal and do it,” Berkshire’s chairman and CEO mentioned. “Occasionally it looks like the odds are in our favor, but absolutely we can lose money on that company, fairly large sums of money, depending on what happened if the deal blows up.”
In January, Microsoft introduced intentions to purchase Activision for $95 per share. Activision closed at $75.60 per share on Friday.
Buffett mentioned he has been shopping for extra shares of Activision because the deal was introduced because the inventory is buying and selling method beneath Microsoft’s supply. Shopping for at these ranges will yield a much bigger return if the deal closes.
“If the deal goes through, we make some money, and if the deal doesn’t go through, who knows what happens,” Buffett mentioned.
“We don’t know what the Justice Department 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 mentioned.
Within the fourth quarter of 2021, Berkshire first bought about $1 billion value of Activision Blizzard inventory, in a bet the corporate was undervalued.
Buffett has mentioned Berkshire “had no prior knowledge” of Microsoft’s plan to purchase the corporate when Berkshire made its preliminary funding.
Take a look at all of the CNBC Berkshire Hathaway annual assembly protection right here.