In this article, we discuss the 10 biggest acquisitions of all time made by Microsoft.
Microsoft Corporation (NASDAQ:MSFT), the Washington-based technology giant, recently announced that it would be acquiring video game holding firm Activision Blizzard, Inc. (NASDAQ:ATVI) in a deal worth more than $68 billion, the largest ever purchase for the firm. The move comes as part of a sustained strategy by Microsoft Corporation (NASDAQ:MSFT) to pursue growth in the gaming industry through mergers and acquisitions. Microsoft Corporation owns the popular gaming console Xbox and several best-selling games.
After the deal is completed, Microsoft Corporation will become the third-largest gaming company in the world by revenue. Already one of the largest software firms in the world, the latest purchase also represents a push by Microsoft Corporation into the “metaverse”. Californian rivals like Meta Platforms, Inc. (NASDAQ:FB) and Alphabet Inc. (NASDAQ:GOOG) have also made similar forays into the digital world of the future, in addition to ecommerce giant Amazon.com, Inc. (NASDAQ:AMZN), albeit through dramatically different methods.
Hedge funds have consistently backed Microsoft Corporation as it pursues a plan for growth, mostly with huge success. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in the firm with 25 million shares worth more than $7 billion. At the end of the third quarter of 2021, 250 hedge funds in the database of Insider Monkey held stakes worth $65 billion in Microsoft Corporation, up from 238 in the preceding quarter worth $62 billion.
Our Methodology
These were picked from a careful assessment of the acquisitions that Microsoft Corporation has made over the years. The purchases have been listed according to the amount that Microsoft Corporation paid for them at the time. The exact amount and the date of the purchase is listed alongside other details for further clarity.
Image by Tawanda Razika from Pixabay
Microsoft’s Biggest Acquisitions of All Time
10. Hotmail.com
Date of Purchase: December 1997
Amount Paid By Microsoft: $500 million
Microsoft Corporation started holding talks to purchase Hotmail.com in late 1997, completing the deal before the new year dawned. At the time, the $500 million that Microsoft Corporation paid for the company, which provided a free webmail service, was the biggest acquisition ever made by the firm. Laura Jennings, the vice president of Microsoft Corporation at the time, told CNET that the purchase reflected the need for a free mail service on MSN, the web portal of Microsoft Corporation.
Microsoft Corporation also aimed to increase advertising revenue through the purchase of Hotmail.com. It aimed to bring the 9 million users of Hotmail by integrating Hotmail services into Microsoft Corporation sites such as MSN, Expedia, and CarPoint. At the time, according to CNET, the total users of MSN totaled nearly 2.3 million, far below the membership of Hotmail. Microsoft Corporation also aimed to compete with rival AOL through the purchase.
Just like Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc., Microsoft Corporation is one of the companies seeking a foothold in the entertainment market.
9. Visio Corp.
Date of Purchase: January 2000
Amount Paid By Microsoft: $1.3 billion
Visio Corp. represented the second biggest purchase of Microsoft Corporation. Talks over the deal started in September 1999 and were completed by early 2000. According to a press release issued by Microsoft Corporation in January 2000, the purchase was made through $1.5 billion in stock. Under the deal, the Visio Corp. would transform into a division of Microsoft Corporation working within the Business Productivity Group.
Bob Muglia, the vice president of Microsoft Corporation at the time, said on the occasion that the purchase would bring “visualization and diagramming software to a broader range of customers while improving the ways knowledge workers can present their ideas”. Visio Corp. was a firm that marketed diagramming solutions to business and enterprise clients. Under the terms of the deal, Jeremy Jaech, the president of Visio Corp., assumed an executive position at Microsoft Corporation.
8. Mojang
Date of Purchase: September 2014
Amount Paid By Microsoft: $2.5 billion
Mojang, the Swedish developer behind the famous game Minecraft, announced in September 2014 that the “pressure” of running the company had become too much on founders and they had decided to sell the company to tech giant Microsoft Corporation in a deal worth $2.5 billion. Mincecraft was a game released in 2009 and had sold nearly 50 million copies on computers, smartphones, and consoles when Microsoft Corporation acquired it.
When the announcement for the Mojang deal was made, Microsoft Corporation included the free download estimates for Minecraft and claimed that the game had actually been downloaded 100 million times on just computers alone. Phil Spencer, the head of Xbox at Microsoft Corporation, sought to soothe fears regarding limiting of the game on certain platforms, saying at the time that Microsoft Corporation had made a “commitment to nurture and grow it long into the future”.
7. aQuantive
Date of Purchase: August 2007
Amount Paid By Microsoft: $6 billion
Microsoft Corporation entered into talks to acquire aQuantive in May 2007 and completed the deal in August 2007. The announcement was made on the Microsoft Corporation website through a press release. The purchase was made to expand upon a plan by Microsoft Corporation to provide the advertising industry with a “world class, Internet-wide advertising platform” that also housed the tools and services needed to generate high returns.
When the purchase was made, aQuantive was among a host of digital marketing agencies with high revenues. According to some estimates, it was the fourteenth largest in terms of revenue in the advertising space. Steve Ballmer, the CEO of Microsoft Corporation at the time, said that the purchase was the “next step” in the evolution of the advertising network of the firm and a leap from the initial investment in MSN. aQuantive comprised three subsidiaries upon purchase that merged with the tech giant.
6. GitHub
Date of Purchase: June 2018
Amount Paid By Microsoft: $7.5 billion
GitHub was one of the most high-profile acquisitions of Microsoft Corporation. It was one of the first major deals of Satya Nadella, the present CEO of Microsoft Corporation. He succeeded Steve Ballmer in 2014. While announcing the deal, Nadella said that Microsoft Corporation was a developer-first company and the purchase of GitHub, a premier software development platform, strengthened the Microsoft Corporation commitment to “freedom and innovation”.
GitHub had more than 28 million developers using the GitHub platform when the deal was made. Under the terms of the deal, GitHub retained independence of operations, including freedom regarding coding languages and new projects. Morgan Stanley was the financial advisor to GitHub at the time of purchase. Microsoft Corporation aimed to report GitHub financials as part of the Intelligent Cloud Segment of the firm and expected accretions to earnings through the deal.
Along with Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc., Microsoft Corporation is one of the companies investing in the metaverse of the future.
5. ZeniMax Media
Date of Purchase: September 2020
Amount Paid By Microsoft: $7.5 billion
The ZeniMax Media acquisition by Microsoft Corporation was another step by the tech giant to increase presence in the gaming industry. ZeniMax Media was the parent company of Bethesda Softworks, a firm that owned eight game studios with several best-selling offerings, including The Elder Scrolls and Fallout. When making the announcement for the deal, Microsoft Corporation underlined that gaming was the fastest-growing entertainment form and would generate annual revenues of $200 billion in the coming years.
Microsoft Corporation touted the success of Xbox Game Pass when announcing the purchase, noting that the cloud-gaming service had reached 15 million subscribers. The ZeniMax Media purchase would help add up to 23 creative studios to the Microsoft Corporation team for cloud gaming services that would contribute to the sustained success of gaming strategy of the tech giant, the press release outlined. Satya Nadella, the CEO Microsoft Corporation, was at the forefront of this deal too.
4. Skype Technologies
Date of Purchase: May 2011
Amount Paid By Microsoft: $8.5 billion
Skype Technologies is still one of the most recognizable brands across the world, especially with regards to wireless social connections. The pandemic has served to highlight the importance of companies like Skype to the overall functioning of business. It is hard to believe that Microsoft Corporation bought Skype for just $8.5 billion more than a decade ago. The deal was worth 32 times the operating profits of Skype and the largest Microsoft Corporation acquisition at the time.
Skype Technologies started out as a business in 2003 and was bought by eBay in 2005 for $3.1 billion. eBay sold a majority stake in Skype to a private investment firm in 2009 for more than $1 billion less than the purchase price. The purchase was also a little confusing since Microsoft Corporation already had software that offered much of what Skype did, which included live chats, video conferencing, and a large user base. However, in the years since, Microsoft Corporation has phased those software out for Skype.
3. Nuance Communications
Date of Purchase: April 2021
Amount Paid By Microsoft: $19.7 billion
Nuance Communications is one of the more recent acquisitions of Microsoft Corporation. The deal represented the second-largest purchase ever by Microsoft Corporation at the time and reflected a strategy of the firm to look for growth through these purchases. Before buying Nuance, Microsoft Corporation had pursued deals to buy chat app Discord and social media app TikTok. Nuance Communications markets tools for speech recognition, a high-growth market segment.
On the day the deal was announced, the share of Nuance Communications climbed by around 16%. Microsoft Corporation shares also registered a small rally. In a press release announcing the deal, Microsoft Corporation noted that the purchase would help improve the cloud products of the tech giant in the healthcare sector. Microsoft Corporation CEO Satya Nadella, commenting on the deal, said “digital tech” was the “key” in the provider market of the future.
2. LinkedIn
Date of Purchase: December 2016
Amount Paid By Microsoft: $26.2 billion
Microsoft Corporation purchased LinkedIn in an all-cash transaction in 2016. LinkedIn was the largest professional network in the world when the deal was made and continues to be so, although the growth of users on the platform has slowed in recent years amid a broader lull around social media offerings as the “metaverse” comes into play. When the deal was made, LinkedIn had nearly 433 millions members, 105 million unique visiting members per month, and 45 billion quarterly member page views.
Microsoft Corporation aimed to use the social services that LinkedIn offered to enhance the usage of products like Microsoft Office 365 and Dynamics. Satya Nadella, the CEO of Microsoft Corporation, said the purchase, the biggest for Microsoft Corporation at the time, would give Microsoft Corporation the chance to “change the way the world works”. The deal was announced in June 2016 and closed in December.
1. Activision Blizzard
Date of Purchase: January 2022
Amount Paid By Microsoft: $68.7 billion
Activision Blizzard is the most recent and the biggest purchase of Microsoft Corporation. The tech giant bought the development firm, famous for blockbuster game offerings, in an all-cash transaction. The deal was the latest in a series of purchases in the gaming space by Microsoft Corporation. After the deal closes, Microsoft Corporation will become the third largest gaming company in the world in terms of revenue, behind only titans like Sony and Tencent. Activision Blizzard owns popular games like Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush.
As part of the deal, Activision Blizzard maintains independence of operations but will report to Phil Spencer, the CEO of the gaming department at Microsoft Corporation. Bobby Kotick, the CEO of Activision Blizzard, said at the time of the announcement of the deal that the combination of the “world-class talent” of the gaming firm with the tech and resources of Microsoft Corporation would help Activision with “continued success” in an increasingly “competitive industry”.
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This article is originally published at Insider Monkey.