Microsoft has "more than zero" chance of closing Activision deal - analyst
Rich Polk/Getty Images Entertainment
Microsoft (NASDAQ:MSFT) has "more than a zero chance" of completing its $69 billion acquisition of videogame giant Activision (NASDAQ:ATVI) and has other catalysts if the deal is terminated, according to Jefferies. 
"There is likely still a less than half probability this deal ultimately gets approved, but it's definitely more than zero which is where we believe the stock is pricing in," Jefferies analyst Andrew Uerkwitz, who has a buy rating and $95 price target, wrote in a note on Friday.
Uerkwitz sees a chance that Microsoft (MSFT) could look to close the deal around the UK's Competition and Markets Authority, which has blocked the deal. This option would require MSFT or rework the merger agreement and would likely cause a lawsuit from the CMA.
"We don't believe Microsoft should go this far or necessarily will go this far, but based on the commentary from Microsoft, it seems plausible," Uerkwitz wrote. 
If the deal is terminated, Uerkwitz expects Activision (ATVI) to do a buyback, likely in the range of $4 billion. The company may do M&A to bolster its near-term "IP opportunities." 
Activision (ATVI) has a "reasonable" valuation, Uerkwitz added.
"At today's price, 20x our 2023E estimate is well within its historical ranges and this doesn't account for the $9B of net cash on the balance sheet, and $12.4B by the end of the year if the deal breaks," Uerkwitz wrote. "The company is executing extremely well following the flawless launch of Diablo IV."
MLex reported last week that Microsoft (MSFT) was evaluating ways to close the Activision (ATVI) deal despite the block from the UK's antitrust authority.
More on Activision/Microsoft

Microsoft president to hold talks with UK Chancellor over Activision deal block
Activision Blizzard: The King Of Special Situation
Sony CEO downplays risk of cloud gaming on console market - FT