It's been over a year since Microsoft (MSFT 1.65%) announced it would acquire Activision Blizzard (ATVI) in an all-cash deal valued at $68.7 billion, yet the deal remains uncertain. Activision shares are trading about 24% below its acquisition price of $95 per share. 

Here's a look at what happened since the deal was announced and whether Activision Blizzard is a buy.

A long path to regulatory approval

The market, fearing antitrust concerns, was skeptical that regulators would approve Microsoft's acquisition of Activision Blizzard from the beginning. Activision stock hasn't reached more than $82 per share over the past year and was as low as $71 per share. 

Activision's shareholders overwhelmingly approved the transaction in April 2022, and there's been a flurry of developments over the past few months.

First, in December 2022, the Federal Trade Commission (FTC) formally announced its intention to block the acquisition as proposed, expressing concern that it would harm consumers and give Microsoft too much control of certain parts of the gaming industry. 

After the FTC announcement, Microsoft responded by claiming it lags behind competitors Nintendo and Sony in gaming consoles and pledged to make Activision's most popular gaming franchise, Call of Duty, available to them for at least 10 years.

In the last few weeks, the European Commission (EC) and the U.K. Competition and Markets Authority (CMA) have publicly scrutinized the acquisition. The EC filed its formal complaint against the acquisition on Feb. 1, citing concerns over reduced competition and less innovation. The CMA released its preliminary findings on Feb. 8, noting that the acquisition "could result in higher prices, fewer choices, and less innovation for U.K. gamers," as well as less competition in console and cloud gaming.

On the positive side, for the transaction going through as intended, Chile, Brazil, Saudi Arabia, and Serbia have all approved the deal. 

What's next?

Microsoft and Activision are currently in court with the FTC, which has resulted in contentious subpoenas to competitors Alphabet, Nintendo, and Sony for discovery documents. 

Regarding satisfying the EC's formal complaint, concessions to the deal, like Activision selling off the Call of Duty franchise to a different buyer, could help facilitate the transaction. In that scenario, Microsoft's bid of $95 per share will likely decrease, and Activision shareholders could be compensated in a separate transaction for the popular franchise.

Meanwhile, the third regulatory body, the CMA, is expected to release its full report on April 26, 2023. Australia, Japan, and New Zealand are also expected to weigh in on the deal but have yet to do so. 

Is Activision Blizzard stock worth buying?

As a stand-alone company, Activision Blizzard stock isn't too appealing, with revenue and diluted earnings per share falling roughly 14% and 37%, respectively, from 2021 to 2022. Also, longtime CEO Bobby Kotick has faced scrutiny over the past couple of years for allegedly harboring a "culture of sexual misconduct," according to a Wall Street Journal report.

As a merger arbitrage play -- a short-term investing strategy of buying stocks of companies trading below their acquisition price -- the stock remains interesting, since Activision is trading 24% below its acquisition price. Even Warren Buffett, arguably the world's most successful investor, is participating in the merger arbitrage. Shortly after the acquisition announcement, Buffett added roughly 54 million shares of Activision Blizzard to Berkshire Hathaway's investment portfolio. 

Berkshire later trimmed that position in Q3 2022 and Q4 2022, but the nearly $700 billion holding company still holds over 52 million shares of Activision Blizzard, or about 6.7% of the gaming company.

While it seems unlikely that the original deal will go through as intended, even a modified one could produce a beneficial return for investors looking to capitalize on the merger arbitrage. But if the deal ultimately falls through, Activision Blizzard investors should put away their controllers and call it quits.