ANNEX C
OPINION OF ALLEN & COMPANY LLC
January 17, 2022
The Board of Directors
Activision Blizzard, Inc.
3100 Ocean Park Boulevard
Santa Monica, California 90405
Activision Blizzard, Inc.
3100 Ocean Park Boulevard
Santa Monica, California 90405
The Board of Directors:
We understand that Activision Blizzard, Inc., a Delaware corporation (“Activision Blizzard”), Microsoft Corporation, a Washington corporation (“Microsoft”), and Anchorage Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Microsoft (“Merger Sub”), propose to enter into an Agreement and Plan of Merger (the “Agreement”). As more fully described in the Agreement, (i) Merger Sub will be merged with and into Activision Blizzard, with Activision Blizzard continuing as the surviving corporation and a subsidiary of Microsoft (the “Merger”), and (ii) each outstanding share of the common stock, par value $0.000001 per share, of Activision Blizzard (“Activision Blizzard Common Stock”) will be converted into the right to receive $95.00 per share in cash (the “Merger Consideration”). The terms and conditions of the Merger are more fully set forth in the Agreement.
Allen & Company LLC (“Allen & Company”) has acted as a financial advisor to Activision Blizzard in connection with the proposed Merger and has been asked to render an opinion to the Board of Directors of Activision Blizzard (the “Board”) as to the fairness, from a financial point of view, to holders of Activision Blizzard Common Stock, other than as specified below, of the Merger Consideration to be received by such holders pursuant to the Agreement. For such services, Activision Blizzard has agreed to pay to Allen & Company cash fees, of which a portion is payable upon the delivery of this opinion (the “Opinion Fee”) and the principal portion is contingent upon consummation of the Merger. No portion of the Opinion Fee is contingent upon either the conclusion expressed in this opinion or successful consummation of the Merger. Activision Blizzard also has agreed to reimburse Allen & Company’s reasonable expenses and to indemnify Allen & Company and related parties against certain liabilities arising out of our engagement.
Allen & Company, as part of our investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, private placements and related financings, negotiated underwritings, secondary distributions of listed and unlisted securities, and valuations for corporate and other purposes. As the Board is aware, although Allen & Company is not currently providing, and during the past two years has not provided, investment banking services to Activision Blizzard unrelated to the Merger or to Microsoft for which Allen & Company has received compensation, Allen & Company in the future may provide such services to Activision Blizzard, Microsoft and/or their respective affiliates, for which Allen & Company would expect to receive compensation. In the ordinary course, Allen & Company as a broker-dealer and certain of Allen & Company’s affiliates, directors and officers have invested or may invest, hold long or short positions and may trade, either on a discretionary or non-discretionary basis, for their own or beneficiaries’ accounts or for those of Allen & Company’s clients, in the debt and equity securities (or related derivative securities) of Activision Blizzard, Microsoft and/or their respective affiliates. The issuance of this opinion has been approved by Allen & Company’s opinion committee.
Our opinion as expressed herein reflects and gives effect to our general familiarity with Activision Blizzard and the industry in which Activision Blizzard operates as well as information that we received during the course of this assignment, including information provided by the management of Activision Blizzard in the course of discussions relating to the Merger as more fully described below. In arriving at our opinion, we neither conducted a physical inspection of the properties or facilities of Activision Blizzard or any other entity nor made or obtained any evaluations or appraisals of the assets or liabilities (contingent, accrued, derivative, off-balance sheet or otherwise) of Activision Blizzard or any other entity, or conducted any analysis concerning the solvency or fair value of Activision Blizzard or any other entity. We have not investigated, and express no opinion or view regarding, any actual or potential litigation, proceedings or claims involving or impacting Activision Blizzard or any other entity and we have assumed, with your
The Board of Directors
Activision Blizzard, Inc.
January 17, 2022
Page 2
Activision Blizzard, Inc.
January 17, 2022
Page 2
consent, that there will be no developments with respect to any such matters that would be meaningful in any respect to our analyses or opinion.
In arriving at our opinion, we have, among other things:
(i)
reviewed the financial terms of a draft, dated January 17, 2022, of the Agreement;
(ii)
reviewed certain publicly available historical business and financial information relating to Activision Blizzard, including public filings of Activision Blizzard, and historical market prices for Activision Blizzard Common Stock;
(iii)
reviewed certain financial information relating to Activision Blizzard, including certain internal financial forecasts, estimates and other financial and operating data relating to Activision Blizzard, provided to or discussed with us by the management of Activision Blizzard;
(iv)
held discussions with the management of Activision Blizzard relating to the operations, financial condition and prospects of Activision Blizzard;
(v)
reviewed and analyzed certain publicly available information, including certain stock market data and financial information, relating to selected companies with businesses that we deemed generally relevant in evaluating Activision Blizzard;
(vi)
reviewed and analyzed certain publicly available financial information relating to selected transactions that we deemed generally relevant in evaluating the Merger; and
(vii)
conducted such other financial analyses and investigations as we deemed necessary or appropriate for purposes of the opinion expressed herein.
In rendering our opinion, we have relied upon and assumed, with your consent and without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information available to us from public sources, provided to or discussed with us by the management and other representatives of Activision Blizzard or otherwise reviewed by us. With respect to the financial forecasts, estimates and other financial and operating data relating to Activision Blizzard that we have been directed to utilize for purposes of our analyses and opinion, we have been advised by the management of Activision Blizzard and we have assumed, at your direction, that such financial forecasts, estimates and other financial and operating data have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to, and are a reasonable basis upon which to evaluate, the future financial and operating performance of Activision Blizzard and the other matters covered thereby. We express no opinion or view as to any financial forecasts, estimates or other financial or operating data or the assumptions on which they are based.
We have relied, at your direction, upon the assessments of the management of Activision Blizzard as to, among other things, (i) the potential impact on Activision Blizzard of certain market, competitive, macroeconomic, seasonal, cyclical and other conditions, trends and developments in and prospects for, and governmental, regulatory and legislative policies and matters relating to or otherwise affecting, the interactive entertainment industry, (ii) existing and new products, franchises and related intellectual property and other technology of Activision Blizzard (including associated risks), (iii) workforce matters and related litigation, investigations, consent decrees and other proceedings, including the potential impact thereof on Activision Blizzard, (iv) implications for Activision Blizzard and its operations of the global COVID-19 pandemic, and (v) existing and future agreements and arrangements involving, and the ability to attract, retain and/or replace, key employees and contractors, customers, third-party developers, manufacturers, distributors and other commercial relationships of Activision Blizzard. With your consent, we have assumed that there will be no developments with respect to any such matters that would have an adverse effect on Activision Blizzard or the Merger or that otherwise would be meaningful in any respect to our analyses or opinion.
Further, our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood that subsequent developments may affect the conclusion expressed in this opinion and that we assume no
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The Board of Directors
Activision Blizzard, Inc.
January 17, 2022
Page 3
Activision Blizzard, Inc.
January 17, 2022
Page 3
responsibility for advising any person of any change in any matter affecting this opinion or for updating or revising our opinion based on circumstances or events occurring after the date hereof. As you are aware, the credit, financial and stock markets, the industry in which Activision Blizzard operates and the securities of Activision Blizzard have experienced and may continue to experience volatility and we express no opinion or view as to any potential effects of such volatility on Activision Blizzard or the Merger.
We have assumed, with your consent, that the Merger will be consummated in accordance with its terms and in compliance with all applicable laws, documents and other requirements, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary governmental, regulatory or third party approvals, consents, releases, waivers, decrees and agreements for the Merger, no delay, limitation, restriction or condition, including any divestiture or other requirements or remedies, amendments or modifications, will be imposed or occur that would have an adverse effect on Activision Blizzard or the Merger or that otherwise would be meaningful in any respect to our analyses or opinion. In addition, we have assumed, with your consent, that the final executed Agreement will not differ from the draft reviewed by us in any respect meaningful to our analyses or opinion.
Our opinion is limited to the fairness, from a financial point of view and as of the date hereof, of the Merger Consideration (to the extent expressly specified herein), without regard to individual circumstances of specific holders of Activision Blizzard Common Stock (whether by virtue of control, voting, liquidity, contractual arrangements or otherwise) that may distinguish such holders or the securities of Activision Blizzard held by such holders, and our opinion does not in any way address proportionate allocation or relative fairness. Our opinion also does not address any other terms, aspects or implications of the Merger, including, without limitation, the form or structure of the Merger, any repurchase, payoff or similar transaction, cloud-related agreements or arrangements or any other agreements, arrangements or understandings entered into in connection with, related to or contemplated by the Merger or otherwise. We express no opinion or view as to the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation or other consideration payable to any officers, directors or employees of any party to the Merger or any related entities, or any class of such persons or any other party, relative to the Merger Consideration or otherwise. We are not expressing any opinion or view as to the prices at which Activision Blizzard Common Stock or any other securities of Activision Blizzard may trade or otherwise be transferable at any time, including following announcement or consummation of the Merger. In addition, we express no opinion or view with respect to accounting, tax, regulatory, legal or similar matters, including, without limitation, as to tax or other consequences of the Merger or otherwise or changes in, or the impact of, accounting standards, tax and other laws, regulations and governmental and legislative policies affecting Activision Blizzard or the Merger, and we have relied, at your direction, upon the assessments of representatives of Activision Blizzard as to such matters. This opinion does not constitute a recommendation as to the course of action that Activision Blizzard (or the Board or any committee thereof) should pursue in connection with the Merger or otherwise address the merits of the underlying decision by Activision Blizzard to engage in the Merger, including in comparison to other strategies or transactions that might be available to Activision Blizzard or which Activision Blizzard might engage in or consider.
It is understood that this opinion and our advisory services are intended for the benefit and use of the Board (in its capacity as such) in connection with its evaluation of the Merger Consideration from a financial point of view. This opinion does not constitute advice or a recommendation to any securityholder or other person as to how to vote or act on any matter relating to the Merger or otherwise.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration to be received by holders of Activision Blizzard Common Stock (other than, to the extent applicable, Microsoft, Merger Sub and their respective affiliates) pursuant to the Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
ALLEN & COMPANY LLC
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SCAN TOVIEW MATERIALS & VOTE ACTIVISION BLIZZARD, INC. C/O BROADRIDGEP.O. BOX 1342 BRENTWOOD, NY 11717 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 8:59 P.M. Pacific Time on April 27, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 8:59 P.M. Pacific Time on April 27, 2022. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.STOCKHOLDER MEETING REGISTRATIONTo attend and participate in the meeting, visit http://www.viewproxy.com/atvism/2022 to register. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D68787-S42001 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting:The Notice and Proxy Statement are available at www.proxyvote.com.D68788-S42001ACTIVISION BLIZZARD, INC.Special Meeting of Stockholders April 28, 2022, 9:00 A.M. Pacific TimeThis proxy is solicited by the Board of Directors.The undersigned stockholder(s) hereby appoint(s) Robert A. Kotick, Frances Townsend and Brian Bulatao or any of them, as proxies for the undersigned, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of ACTIVISION BLIZZARD, INC. that the stockholder(s) is/are entitled to vote at the Special Meeting of Stockholders to be held at 9:00 A.M., Pacific Time, on April 28, 2022, in a virtual only format at http://www.viewproxy.com/atvism/2022, and any adjournment or postponement thereof.This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations for proposals 1, 2 and 3 and as the proxies named above deem advisable on any other matters that properly come before the Special Meeting of Stockholders or any adjournment or postponement thereof.Continued and to be signed and dated on reverse side
