Value creation through M&A

This thesis investigates the strategic, financial, and operational dimensions of mergers and acquisitions (M&A), with a particular focus on the video game industry and the landmark acquisition of Activision Blizzard by Microsoft. Part I presents a theoretical and empirical framework for understanding M&A dynamics, covering historical waves, valuation methodologies, sources of value creation, and common causes of deal failure. Emphasis is placed on synergies, risk diversification, and real options as key drivers of long-term value. Regulatory and antitrust concerns are also analyzed, particularly in high-growth, innovation-driven sectors. Part II applies this framework to Microsoft’s $68.7 billion acquisition of Activision Blizzard, exploring the strategic rationale, valuation techniques, and expected synergies in both revenue and operations. The analysis uses discounted cash flow models under two scenarios—acquisition and non-acquisition—to assess the financial implications and value creation potential. The case study illustrates how Microsoft aims to consolidate its gaming ecosystem, expand its subscription-based model, and secure competitive advantage in cloud gaming and digital content. This research underscores the importance of strategic alignment, cultural integration, and regulatory compliance in achieving successful outcomes in M&A transactions.