Berkshire owns 9.5% stake in Activision Blizzard in merger arbitrage bet

Warren Buffett on Saturday said Berkshire Hathaway has been increasing its stake in Activision Blizzard In a merger arbitrage game, bet that Microsoft’s proposed acquisition of a video game company that will close.

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

“Sometimes I’ll see an arbitrage trade and do it,” said the Berkshire chairman and CEO. “Sometimes it seems like the odds are in our favor, but we could totally lose money on that company, quite a bit of money, depending on what happened if the deal fell through.”

In January, Microsoft announced intention to purchase Activision at $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 below Microsoft’s offer. Buying at these levels will give a bigger profit if the trade closes.

“If the deal goes through, we make some money, and if the deal doesn’t work out, who knows what will happen,” Buffett said.

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

In Q4 2021, Berkshire first bought Activision Blizzard stock worth about $1 billion, betting that the company was undervalued.

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

See all the news about the CNBC Berkshire Hathaway annual meeting this.

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