Shares of Activision Blizzard (NASDAQ:ATVI) are gaining 3% in pre-open trading Monday after Warren Buffett announced that his Berkshire Hathaway (NYSE:BRKa) now owns a 9.5% stake in the video game maker, which is in a merger agreement with Microsoft (NASDAQ:MSFT).
The arbitrage spread on the pending merger was a whopping 25.6% based on Friday's close on concerns antitrust regulators won't allow the deal to close. Microsoft agreed to pay $95 per share in cash, and shares closed Friday at $75.60.
Mr. Buffett said the new purchase was his, not his portfolio manager.
"It is my purchases, not the manager, who bought it some months ago," Buffett said. "And if the deal goes through we make some money, and if the deal doesn't go through who knows what happens."
Berkshire originally bought a $1 billion stake in Activision Blizzard before the January 18th merger announcement. Now, that stake is worth $6 billion after the new purchases.