Activision met with an advisory firm to explore topping Take-Two’s $12.7 billion offer for Zynga, but sold to Microsoft instead

Activision Blizzard met with a financial firm to work on topping Take-Two‘s $12.7 billion acquisition of Zynga before agreeing to sell to Microsoft this weekend, according to a person familiar with the matter.

Activision recently reached out to a financial advisor to make a presentation to its board about topping Take-Two’s bid, the person said, who asked not to be named because the talks were private. Those discussions took place last week, the person said. Microsoft’s deal with Zynga was already near completion and wasn’t in danger of falling apart, another person said.

It’s unclear exactly why Activision was interested in Zynga. It is not unusual for companies to express interest in jumping an offer if it allows them to see a rival’s books. Goldman Sachs, which represented both Zynga and Microsoft, called Activision as part of its “go shop” process, according to a person familiar with the matter. The bank’s “Chinese walls” prevented bankers from knowing that Activision was on the verge of selling to Microsoft, said the person, who asked not to be named because the discussions are private.

As a condition of Take-Two’s deal for Zynga, there is a 45-day go shop provision that allows other companies to top the $12.7 billion offer. If Zynga goes with a different bid, it must pay Take-Two $400 million. Take-Two’s offer already represented a 64% premium to Zynga’s closing price the day before the deal was announced, so a topping bid would be expensive for any company.

An Activision Blizzard spokesperson wasn’t immediately available for comment.

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