When one company buys another, like Microsoft and Activision, where does the money go?

Question

When a deal like Microsoft buying Activision goes through, does the money that the company is paying go to the company being bought? Does it go to the shareholders? Does the Activision stock just go away?

The reason I am confused is, if Microsoft gives Activision billions of dollars, at the end of the day, isn’t Microsoft effectively giving themself billions of dollars?

​

I’m using Microsoft and Activision as an example, but I am curious about how this works in general.

In: 2

Answer 1

Microsoft offered to buy all shares of Activision at a certain amount per share, then since Activision’s shareholders have enough of a majority to allow the purchase, anyone who owns Activision shares has to sell them whether they voted to or not because that’s what they agreed to when they bought the shares