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Neoxon

Spotlighting Black Excellence - Diversity Analyst
Member
Oct 25, 2017
85,299
Houston, TX
Yea this is basically the same approach that we are taking with Codemasters. Where there will be a subsidiary established called Codex Games that would handle the integration.

No idea what the actual legal or management reasons for these things are, though.
That makes sense
 

Noble

Member
Oct 27, 2017
1,680
Relevant:

Bethesda is not a part of Xbox Game Studios. They are a part of Xbox, creating a second publishing arm, as Bethesda will remain completely in-tact after the acquisition. [...]

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OP
OP
Marano

Marano

Member
Mar 30, 2018
4,893
Rio de Janeiro
The best thing for this deal and Bethesda Studios is if they keep them separate from Xbox.
That's clearly not happening.
Matt Booty has nothing to do with Bethesda. Xbox Game Studios and Bethesda will be separate.
Like some said already said it will fall under xbox as in xbox is what the gaming division of MS is called. Phils is the head of Xbox and VP of gaming, Phil along with the VPs of the other divisions all report directly to Satya, Matt Booty is head of XGS and reports to Phil, Vault will be a publishing arm of xbox and whoever is head of this publishing arm will report to Phil and have all the zenimax studios report to them. It is like a chain of command thing, the disney and their labels is a good example of this.
 

Noble

Member
Oct 27, 2017
1,680
Phil. This is practically labels like how Disney has Pixar, LucasFilm, and Marvel. XGS and Bethesda are both labels. Bethesda being it's own label is why there won't be job losses as they not integrating into XGS like Double Fine and the other acquired developers that report to Booty. Pete Hines will probably report to Phil. If not him one of the other VPs.
Although you are right, this has nothing to do about labels. It's pure M&A strategy.

What is a Subsidiary Merger?
A subsidiary merger is a type of merger that occurs when the acquiring company uses its subsidiary company to acquire a target company. The acquirer may create a subsidiary company or use one of its existing subsidiary companies to execute the merger and acquisition transaction. In a subsidiary merger, the acquired company is merged with the subsidiary of the acquirer rather than merging directly with the acquiring company (the parent company) in a regular M&A Deal.

Following the deal, the target company then becomes a wholly-owned subsidiary of the acquiring company, with the buyer (the parent company) as the sole shareholder. This means that the acquirer exerts total control over the entity, potentially gaining control also of the latter's non-transferrable assets and contracts. The main purpose of a subsidiary merger is to protect the buyer from the liabilities of the target company.

In this case, it's about this specific type:

Reverse Triangular Merger
A reverse triangular merger shares a lot of similarities with a forward triangular merger; however, they differ in the party that is liquidated. In a forward triangular merger, the target company is liquidated, whereas, in a reverse triangular merger, the subsidiary created by the purchasing entity is liquidated.

A reverse triangular subsidiary merger begins when an acquiring entity uses its subsidiary to acquire another company. After the acquisition, the subsidiary is absorbed into the acquired company, and the buyer (the parent company) becomes the only shareholder. The acquired company becomes a wholly-owned subsidiary of the acquiring entity, and the buyer acquires all the assets and liabilities of the acquired company.


Pros and Cons of Reverse Triangular Merger

A reverse triangular merger retains the selling entity and liquidates the shell company created for the purpose of executing the acquisition. The acquired entity continues its regular operations as a subsidiary of the buyer, and the acquiring entity will not need to sign new contracts, licenses, and authorizations. This makes the reverse triangular merger more often preferred over a forward triangular merger.

For the merger transaction to be tax-free, the acquiring entity must use its stock to acquire 80% of the target company's stock. Cash and other non-stock consideration must not exceed 20% of the total consideration paid if the buyer wants to enjoy a tax-free acquisition transaction.

subsidiary-merger1-1-1024x491.png


Source

In a shorter quote:

"The main purpose of a subsidiary merger is to protect the buyer from the liabilities of the target company."

In gamer terms: nothingtoseehere.gif
 

Camonna Tong

Member
Mar 2, 2018
1,449
Although you are right, this has nothing to do about labels. It's pure M&A strategy.



In this case, it's about this specific type:



subsidiary-merger1-1-1024x491.png


Source

In a shorter quote:

"The main purpose of a subsidiary merger is to protect the buyer from the liabilities of the target company."
I know, just replying to someone who was wondering who Bethesda would report to which is why I started talking about labels.
 

supercommodore

Prophet of Truth
Member
Apr 13, 2020
4,190
UK
satya probably for the time being

Of all the companies MS have acquired only the LinkedIn CEO is an EVP. Probably because LinkedIn itself is almost a $10 billion a year "company/division". Seems pretty unlikely Bethesda CEO will be on the senior leadership team. Also, not sure why Satya would want an internal game publisher to report to him and not the EVP of gaming.

Standard way to avoid being charged with monopolization

I don't think that's how it works.
 

BAD

Member
Oct 25, 2017
9,565
USA
I think this lends credence to the fact we haven't heard any Bethesda studios labeled as part of Xbox Game Studios. Seems like they are letting Zenimax stay an independently managed subsidiary and not just folding the business to instead run all the devs under XGS.
 
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OP
Marano

Marano

Member
Mar 30, 2018
4,893
Rio de Janeiro
I think this lends credence to the fact we haven't heard any Bethesda studios labeled as part of Xbox Game Studios. Seems like they are letting Zenimax stay an independently managed subsidiary and not just folding the business to instead run all the devs under XGS.
This was always going to be the case.

It is a subsidiary of xbox like XGS, it is a second publishing arm.
 
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Fabtacular

Member
Jul 11, 2019
4,244
This is just how you structure just about any corporate acquisition:
  • Buyer creates a merger sub
  • Buyer puts purchase consideration (cash) into the merger sub
  • Target adopts a plan of merger, whereby it will merge with an into merger sub, with Target surviving
  • Under the terms of the merger, the shares held by the Target shareholders will be exchanged for the purchase consideration (cash)
The reason you structure a merger this way is because otherwise you're engaging in dozens/hundreds/thousands of individual purchase contracts with the individual shareholders. Doing it this way, the transaction can be accomplished on the Target side via a corporate resolution.

Nothing more to it. This is literally how 99% of corporate acquisitions are accomplished.
 

OneBadMutha

Member
Nov 2, 2017
6,059
I think people are reading too much into this. As an aside, buddy of mine interviewed there. Was told they expect to be business as usual and operate autonomously. In line with what we've heard but interesting seeing it emphasized to potential new hires. Seems to have been a major key point in the aquisition.
 

dlauv

Prophet of Truth - One Winged Slayer
Member
Oct 27, 2017
11,513
They sure do love their twee names for studios.
 

Biggzy

Member
Oct 27, 2017
2,929
I think this lends credence to the fact we haven't heard any Bethesda studios labeled as part of Xbox Game Studios. Seems like they are letting Zenimax stay an independently managed subsidiary and not just folding the business to instead run all the devs under XGS.

That was always the plan: To keep Zenimax as a seperate entity within the Xbox division and not integrated within Xbox Game Studios. It makes logical sense when you consider that Zenimax is a pretty big publisher and would be too cumbersome to try and fully integrate them within XGS, poor Matt Booty would have his plate full lol.

It is best to leave Zenimax as they are in terms of the day to day running because it just works - pun intended lol.

Also, it does seem that Xbox has learned from its past and generally does leave their new studios alone in terms of running themselves.
 

BAD

Member
Oct 25, 2017
9,565
USA
This was always going to be the case.

It is a subsidiary of xbox like XGS, it is a second publishing arm.
That was always the plan: To keep Zenimax as a seperate entity within the Xbox division and not integrated within Xbox Game Studios. It makes logical sense when you consider that Zenimax is a pretty big publisher and would be too cumbersome to try and fully integrate them within XGS, poor Matt Booty would have his plate full lol.

It is best to leave Zenimax as they are in terms of the day to day running because it just works - pun intended lol.

Also, it does seem that Xbox has learned from its past and generally does leave their new studios alone in terms of running themselves.
I agree, there just were lots of people posting they were all XGS now and even graphics going around making it look like Bethesda was under XGS. But I think it is very intentional that the companies never said that.
 

DeoGame

Member
Dec 11, 2018
5,077
I think this lends credence to the fact we haven't heard any Bethesda studios labeled as part of Xbox Game Studios. Seems like they are letting Zenimax stay an independently managed subsidiary and not just folding the business to instead run all the devs under XGS.
I think Bethesda will be managed separately but with unified access to the same IP pool, possible Xbox Game Studios and Bethesda Softworks presents moniker.
 

Biggzy

Member
Oct 27, 2017
2,929
I agree, there just were lots of people posting they were all XGS now and even graphics going around making it look like Bethesda was under XGS. But I think it is very intentional that the companies never said that.

No, it was always going to be what Marvel Studios is to Disney and Walt Disney Studios.

Matt Booty will have no influence over the games made by Bethesda instead Phil will have two people reporting to him : Pete Hines and Matt Booty in terms of the games being developed by Xbox. If you are a developer working for Zenimax I doubt you will notice any change apart from maybe only focusing on PC and Xbox.
 

arsene_P5

Prophet of Regret
Member
Apr 17, 2020
15,438
Standard way to avoid being charged with monopolization
Lol, they won't be charged for that anyways. How small do some people think the gaming business is?
This is a meme, right?
Sadly not.
Phil said Bethesda is "VITAL" for Xbox success so I think they will be integrated in some way to xbox.
I think Zenimax will be under Xbox, however Xbox will have two publishers going forward. The XGS arm and then Zenimax. All report to Spencer, but booty has nothing to do with zenimax for example.
 

LilScooby77

Member
Dec 11, 2019
11,102
So can Bethesda make their own purchases? Like they bought Id, so can they buy other devs through their branch?
 

Deleted member 68874

Account closed at user request
Banned
May 10, 2020
10,441
Matt Booty not having a say of what goes on at Bethesda is a bummer, since it seems like he's letting the XGS teams make whatever they want.
 

Scottoest

Member
Feb 4, 2020
11,332
I like to think that they have a big wheel of fortune wheel with all their dormant ips on it, if a studio isnt sure what they want to do next they get to spin the 'wheel of ip' to see what they are handling next

(I would unironically like to see this be an e3 event )

Xbox should hold a charity drive every year or something, and if they hit some predetermined financial limit, they spin a big wheel on-stage at E3 with a bunch of unused IP on it, then pledge to make a game for whatever it lands on.

I don't think I'd put EVERY IP they own on it, since some would probably be guaranteed money losers in this day and age - but you could throw on all of the ones people are familiar with, and could get excited about.

It would be such a fun annual event.
 

Scottoest

Member
Feb 4, 2020
11,332
I wonder if this acquisition business ends with Matt Booty eventually being elevated to a new position that oversees XGS and Zenimax, or if he's just going to stick with XGS, and Zenimax becomes a parallel reporting structure with it's own Matt Booty.

Anyway, as has been pointed out already, there's not much to glean from this. It's just corpo-maneuvering for managing large acquisitions.

The best thing for this deal and Bethesda Studios is if they keep them separate from Xbox.

Zenimax are still going to fall under Xbox, and report to Phil Spencer (or someone directly under him). That won't give them any more or less creative independence than the XGS studios already have.
 

Scottoest

Member
Feb 4, 2020
11,332
Heard that one about Mojang/Minecraft titles for years now too... still waiting for it to happen.

You've been hearing about Minecraft going exclusive for years now? What?

Microsoft have never stopped supporting Minecraft on other platforms, and never made so much as a peep that they were going to do otherwise, so not sure where you'd be hearing this from.

Minecraft's power is in it's ubiquity as essentially digital Lego you can play on anything, and Microsoft know that. This is also a very unique situation that doesn't really apply to any other studio/franchise Microsoft do - or are about to - own.
 

ninezeroone

Member
Oct 27, 2017
296
Heard that one about Mojang/Minecraft titles for years now too... still waiting for it to happen.

With the Minecraft acquisition they made it very clear it was staying multiplatform.
At Microsoft, we believe in the power of content to unite people. Minecraft adds diversity to our game portfolio and helps us reach new gamers across multiple platforms. Gaming is the top activity across devices and we see great potential to continue to grow the Minecraft community and nurture the franchise. That is why we plan to continue to make Minecraft available across platforms – including iOS, Android and PlayStation, in addition to Xbox and PC.
Minecraft to Join Microsoft - Xbox Wire
 

Mugen X

Member
Oct 27, 2017
5,744
Colorado
Kinda - So MS already considers many of its acquired studios as "LIC"s - limited integration companies. These studios are to be essentially left alone, not fully integrated within the XBOX first party studio lineup. Zenimax definitely falls into this category.

By creating Vault, Microsoft could do a lot of things - some interesting and some totally boring. You can create a new legal entity prior to close to begin some of the integration work so when close does happen, it doesn't take as long to get people ramped up. They could use "vault" as a landing spot for all future acquired businesses that shouldn't be fully integrated (think publishers/not developers) Vault on its own could have 0 employees prior to zenimax OR it could have a group of employees with a specific strategic mission that lines up with zenimax's importance to MS. Maybe Vault will be where games are made for multiple platforms - not just MS/PC.

M&A is fun! haha .. and complicated
Hmm, ya this has me curious about whether or not they'll actually make Bethesda's games exclusives or just feature them all on gamepass day one.
 

Gamer @ Heart

Member
Oct 26, 2017
9,551
Man, some of you are projecting alot of hopium that this means something that it doesn't

They didn't spend 7.8 billion dollars to sell a few million copies of bethesda games on playstation. They want your sub money every month, and for you to buy all your microtransactions through their ecosystem because you got the game 'free' through them. Exclusives are how they will achieve that.

Anyway, I wonder how much redundancy this merger will ultimately produce. Are all the marketing, production, logistics people at bethesda just waiting for the severance package at this point? Hopefully this arm being somewhat separate saves some jobs.
 

Dhruvenator

Member
Aug 29, 2019
1,167
Hmm, ya this has me curious about whether or not they'll actually make Bethesda's games exclusives or just feature them all on gamepass day one.
To be clear, they are most likely (99%) doing this as part of regular M&A practices. It's just fun to
Imagine if they were to create an offshoot entity that would house their limited integrated companies