Activision Blizzard šŸŽ® - ATVI

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When I see discussions about Twitter $3-$5 upside

Donā€™t forget Microsoft offered to buy ATVI at $95. Itā€™s currently trading at $77. 19% discount of deal not going through

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Iā€™ve decided to do a bit of a takeover arbitrage here, I donā€™t think the market is pricing this correctly. The SEC havenā€™t made enough noise to warrant a $15 discount to the share price.

Given the market is like catching falling knives Iā€™m happy to park funds here for a few months for a 20%+ ROCE (return on capital invested)

Exactly, I mean itā€™s not exactly an unattractive company to own and thereā€™s still plenty of video game expansion left.

Same with Twitter, Iā€™m happy leaving some money in there for a 10% upswing.

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Isnā€™t that what warren buffet has been doing?

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@FiftyDolTrader youā€™d have ride out a choppy moth or two but ther is a argument that midcrosoft are getting it at a good price.

@Sims I donā€™t know how long he is holding / has been doing it but yes heā€™s doing the same.

Iā€™m considering arbitrage also as Microsoft is less exposed to regulatory scrutiny than other big tech and they have made their position clear. I think thereā€™s less than a 20% chance this gets held up, members of Congress have already voiced support for example. The big risk for me is FX, with the dollar on a tear a reversal could weigh heavy, although I do expect that to continue as rates rise and the global economy weakens.

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Tricky play this one. Current valuation seems to make it an easy win but the deal isnā€™t expected to go through until next year. Opportunity cost in that time has to be taken into account especially given the current market situation. I think I will watch this from the sidelines for a couple more months and then decide.

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Spot on with the mention of opportunity cost. Thatā€™s exactly what needs to be considered before jumping in.

Iā€™m wondering if this will trade flat; slowly increase over time; or suddenly jump to near the deal price. I suppose a bit of good news on the acquisition would provide support for a bump up in price.

90% of mergers go through, you could gamble on the current market and hope for some juicy returns if inflation turns out to be transitory or you could get a 23% return over roughly a year with relatively little risk.

Hi Neil,
I have a question here. If I hold Activision in an Isa, what will happen when the deal is done? how do we get the $95?

Thanks.

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Iā€™ve not looked into the deal but assuming Microsoft made an all cash offer youā€™ll get the $95 dollars credited. Youā€™re still selling the shares just not on the open market.

It doesnā€™t affect your allowance and being in an ISA any gains are yours to keep without Rishi taking a cut!

If the US already takes a share, do we still have to pay tax in the UK?

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If you hold your shares in an ISA then there is no US or UK tax due on the sale of your shares.

Thanks, and what are the implications if theyā€™re held in a normal non-ISA Freetrade investment account?

If tax is deducted by the US, the worst case you will be in is you will have to pay the difference in the tax if your marginal rate is higher than the amount deducted.

Edit: was thinking Income tax, but this should be CGT. As far as I know, there should be no overseas CGT (or equivalent) deducted when selling US shares, so the gain will be subject to CGT. If your total capital gain for the year exceeds the CGT exemption of Ā£12,300. Then tax will be 10% at basic rate or 20% at higher or additional rate. But itā€™s only tax on the increase in value not the entire proceeds.

Uk blocks the Microsoft deal and now the stock has dropped

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Does anyone know what power specifically the UK has to block a merger between 2 US companies? I imagine it can just be ignored by MS and Activision?

They could, but then the CMA and other government agencies (both UK & elsewhere) may cause larger problems down the lineā€¦

Eg tax issues, HMRC wonā€™t work with them and offer discounts but go after for full amounts.

Itā€™s opposed by Canada and the US government is going to court to try to stop it.