Microsoft Takes a Second Crack at Bid for Activision, and Ubisoft Shareholders Are Happy to Hear It. Here's What Investors Should Know.

If at first you don't succeed, try, try again. Microsoft (MSFT 1.82%) is doing just that with its attempt to acquire Activision Blizzard (ATVI).

The Seattle-based technology giant's latest run at trying to convince U.K. regulators to approve the deal is making Ubisoft Entertainment (UBSFF 7.13%) (UBSFY 0.87%) shareholders happy. Here's what investors should know. 

Why is Ubisoft stock soaring? 

Microsoft first submitted a plan for acquiring Activision Blizzard to the U.K.'s Competition and Markets Authority (CMA) in January 2022. However, the regulatory agency blocked that proposal over concerns that the acquisition would hinder competition in the cloud gaming market.

This setback caused Microsoft to rethink its approach. Now, the company is agreeing that it won't gain the cloud rights to any of Activision Blizzard's existing games designed for PCs or consoles. Microsoft also won't own cloud rights for any new games released by Activision over the next 15 years.

That's where Ubisoft comes into the picture. Microsoft plans to sell the cloud rights to Activision's games to the French game maker before it closes the acquisition.

Ubisoft stock soared close to 10% Tuesday morning after the news broke. The company already markets popular games, including Assassin's Creed and Prince of Persia. The restructured agreement proposed by Microsoft would give Ubisoft access to market Activision Blizzard's strong lineup of games, including Call of Duty and World of Warcraft, on the cloud.

Will Microsoft's latest gambit work? 

At least on the surface, Microsoft's proposal seems to address the initial concerns that caused the CMA to block the acquisition of Activision Blizzard. Ubisoft will control the cloud rights to Activision Blizzard's games. Microsoft won't be able to release Activision Blizzard games exclusively on its Xbox Cloud Gaming service. 

Importantly, Microsoft's restructured agreement shouldn't interfere with obligations already made to secure the European Commission's approval of the Activision Blizzard acquisition. Microsoft president Brad Smith said in a blog post that the company will still be able to honor all of the commitments it made to the European Commission. 

However, there's still some level of uncertainty with Microsoft's latest gambit. Smith said that the tech giant "is engaging closely" with the European Commission as it reviews the new agreement to confirm all previous commitments won't be impacted.

U.K. regulators must also approve the restructured agreement. Microsoft also expects that the CMA will be able to complete its review process before a 90-day extension of the agreement to acquire Activision Blizzard expires on Oct. 18.

Should investors consider buying these stocks on the news?

Ubisoft didn't announce the financial details of how much they will pay Microsoft if the new agreement is approved. While it makes sense that the gaming stock jumped on Tuesday, there's no way to know for sure exactly what the impact of gaining cloud rights to Activision Blizzard's games will be without the missing information.

Microsoft's latest proposal could increase the likelihood that it will be able to acquire Activision Blizzard. The price tag of the deal is $95 per share, which is roughly 3.5% above Activision's current share price. Investors who buy Activision Blizzard stock now could be able to make a small profit. 

What about Microsoft stock? I don't think the news of the restructured agreement is enough by itself to justify buying shares of Microsoft. The stock is also priced at a premium right now with its forward earnings multiple of nearly 29x.

However, I view Microsoft as a solid pick for long-term investors. The company has multiple growth opportunities, including artificial intelligence and cloud services. Bringing Activision Blizzard into the fold would be icing on the cake.