Microsoft and Activision refuse to give up the game

Three scoops to start:

1. Gautam Adani faced a margin call of more than $500mn on a $1.1bn share-backed loan, prompting the Indian tycoon to repay the whole debt, said four people with direct knowledge of the matter.

2. Credit Suisse’s top executives will share a SFr350mn ($380mn) bonus pool if they pull off a radical restructuring designed to restore the fortunes of the scandal-hit bank, said people familiar with the matter.

3. Seth Klarman has told investors in his hedge fund that the Federal Reserve’s response to the 2008 financial crisis and the ensuing decade-plus of low interest rates had helped “erect a financial fantasyland”.

In today’s newsletter:

• Microsoft and Activision press on

• Inside the Rothschilds’ take-private plan

• FTX’s celebrity entourage

Kotick’s $75bn call of duty

Bobby Kotick struck his first deal at the age of seven when he traded his parents’ ashtray to a friend who had come over for a play date. Selling Activision Blizzard, the video game business he built through deals spanning almost 40 years, is proving more challenging.

When Microsoft announced its $75bn bid for Kotick’s company in January 2022, the Seattle software giant behind Minecraft said buying the maker of Candy Crush and World of Warcraft would let it “bring the joy and community of gaming to everyone, across every device”.

More than a year later, however, regulators aren’t feeling the joy. In December, the US Federal Trade Commission sued to block the deal. On Wednesday the UK’s Competition and Markets Authority warned that Microsoft’s plans could “result in higher prices, fewer choices, or less innovation for UK gamers”.

Raising the spectre of Microsoft making Activision’s Call of Duty exclusive to its Xbox console, the UK regulator said the companies may even have to sell the franchise to get their deal through.

The CMA’s final verdict won’t come until April. Microsoft, a seasoned political operator since Bill Gates was dragged to Capitol Hill for antitrust hearings in the 1990s, is expected to use the intervening weeks to persuade the CMA to accept a behavioural solution, the FT’s Kate Beioley writes.

But diplomacy didn’t seem to be top of mind for Kotick when he spoke to the FT’s Andrew Edgecliffe-Johnson and Patrick Temple-West just before the CMA news broke.

The gaming boss let rip about how the UK was missing a post-Brexit chance to attract jobs in one of the industries in which it is already a world leader.

“It doesn’t seem like there is any real vision in the leadership for pursuing these kinds of opportunities,” he said, adding for good measure: “It seems like a bit of a fragile government.”

While the CMA “seem like they’ve been co-opted by the FTC ideology”, Kotick said the EU had shown “a lot more insight and recognition” of the economic risks at play.

Kotick also noted Microsoft had hired Beth Wilkinson, a Washington-based antitrust veteran. “She feels like if she is going to have to litigate against the FTC, she will absolutely crush them,” he said.

It’s unclear whether Microsoft sanctioned this bare-knuckled strategy. But Kotick appears to have messages for all three markets reviewing his deal: to Brexit Britain, “Your economy needs the jobs I can bring”; to the EU, “Let’s talk”; and to the US, “Don’t let China dominate this industry too.”

Whether or not Microsoft and Activision succeed, it looks like we’re all in for a world of warcraft over the coming months.

The Rothschilds look to keep it in the family

Being the seventh-generation heir to one of the world’s most famous banking dynasties — with its share of inter-clan rivalries — is a task delicate enough.

Throw in a take-private bid for the family business, and things get even trickier.

That’s the challenge facing Alexandre de Rothschild, the 42-year-old scion who, after five years at the helm, is stepping into his power in a big way: taking the Rothschild empire private and ending years of limbo as a listed company.

“You can’t be half pregnant,” de Rothschild told the FT. “It was clear that we had reached the limit and full potential of the listing. Our DNA is much better suited to being a private company.”

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The €3.7bn deal is the latest move by the family, which has long sought to be the master of its own destiny. In 2012, Alexandre’s father David orchestrated a merger with the British merchant banking arm of the Rothschild dynasty — the one started by its original patriarch in 1810.

That deal helped unify its corporate structure under Paris-listed parent group Rothschild & Co as well as boost the company to its current valuation.

But Alexandre and David de Rothschild still see the need to solidify control of a company they feel is held captive by quarterly reporting, despite advising their clients to invest long term. There has also been frustration that its share price has not accurately reflected its strong operational performance.

Standing in their way are a group of minority shareholders that rival bankers say could try to wring more money out of its ruling family.

“Minority shareholders will have to be convinced to sell out; they may yell that the price is insufficient . . . But if you’re an activist shareholder of sorts or an institution, do you stand in the way of the entire Rothschild family?” said one senior banker in Paris.

The €48-per-share offer, a 19 per cent premium to Friday’s closing price, underscores the speed at which the Rothschilds are looking to get a deal done.

To help them out in the process of taking it private the Rothschilds are talking with some of France’s wealthiest families, including the Peugeots.

Exane BNP Paribas analyst Jeremy Sigee said: “It’s about Alexandre’s ascendancy and him wanting to make his mark, to put the firm — and the family — on the best footing for the future.”

FTX’s A-list entourage

As the Kansas City Chiefs and Philadelphia Eagles prepare for the Super Bowl this Sunday, DD is reminded of our favourite ad from last year’s game.

“Don’t be like Larry” when it comes to innovation, FTX’s multimillion-dollar spot warned, as comedian Larry David traversed through history shooting down advancements from democracy to indoor toilets.

It seems that many celebrities may have been listening. Some of the world’s most powerful talent agencies and their executives bought shares in the now-imploded crypto exchange alongside their celebrity clients, a web of influence charted by our FT colleagues in this interactive piece.

Though FTX typically had a minimum threshold for investors wanting to buy its stock, it made exceptions for celebs and their agents looking to purchase smaller blocks.

In turn, its elite clientele’s star appeal helped boost the company’s image. The result was an intricate network that in effect promoted FTX, stemming from big-time talent agencies such as IMG, WME and Octagon and their client lists of professional athletes and Hollywood stars.

People familiar with the deals said these sought-after clients were shown financial information just like any other prospective investor. In other words, they were likely led down the same alleged trail of deception plodded by FTX founder Sam Bankman-Fried as everyone else.

In addition to their holdings being ostensibly wiped out in FTX’s bankruptcy, though, high-profile endorsers might lose some credibility when it comes to hawking financial advice on social media.

A March 2022 tweet from basketball superstar Steph Curry summed it up well: “Do I look like a crypto expert?! Thankfully @FTX_Official got me”. 

Job moves

Former Roche boss Bill Anderson will become the next chief executive of Bayer. His predecessor Werner Baumann has faced pressure from activist investors including Jeff Ubben.

Morgan Stanley veteran Jeff Hogan has joined Wells Fargo as co-head of global mergers and acquisitions.

Manchester City football club has hired Blackstone Chambers’ Lord Pannick KC to defend itself after the Premier League brought 100 allegations of rule-breaking by the English champions, per The Lawyer.

Silvia Biscaldi, a managing director within Goldman Sachs’s alternative equity products unit, has joined Abu Dhabi’s sovereign wealth fund Mubadala as a growth investor.

Liontrust Asset Management’s head of global equities Robin Geffen, who joined the group in 2019 when it acquired his firm Neptune Investment Management, is leaving the fund.

Smart reads

The perfect storm From Nelson Peltz’s crusade on Disney to Elliott Management’s stake in Salesforce, the transition to a “new-Covid-normal” and plunging valuations have created ideal conditions for aggressive activist campaigns, Bloomberg writes.

Someone call HR The Tabloid-strewn affair between ABC News anchors TJ Holmes and Amy Robach has cast a spotlight on what has been described as the network’s “rampant culture of sex” — which sometimes turned problematic when power dynamics became involved, New York Magazine reports.

News round-up

CVS Health to boost primary care business with $10.6bn deal for Oak Street Health (FT + Lex)

TotalEnergies puts $4bn hydrogen investment with Adani on hold (FT)

ECB piles pressure on banks to exit Russia even as window for sale closes (FT)

SocGen profits slide as bank lifts bad loan provisions fivefold (FT)

McDonald’s signs deal with UK equalities watchdog over sexual harassment complaints (FT)

Hermès wins landmark lawsuit over ‘MetaBirkin’ NFTs (FT)

Disney to axe 7,000 jobs in $5.5bn cost-cutting plan (FT)

Brexit displaces London bankers to live ‘la dolce vita’ in Milan (The Lex Newsletter)