Sony shares staged a recovery on Thursday in Japan after previously plunging on news of Microsoft’s proposed acquisition of games giant Activision Blizzard.

At the Thursday lunchtime trading halt in Tokyo, Sony Group Corp. shares were priced at JPY12,860 apiece, up 3.6% from their Wednesday close of JPY12,410. On Wednesday, the shares had fallen by nearly 13% from JPY14230 as the deal appeared to herald a growing battle between Sony’s PlayStation console and Microsoft’s Xbox.

Microsoft said that its $68 billion deal, which may take more than a year to close, would make it the world’s third largest games company by revenue, after China’s Tencent, and Japan’s Sony.

The move would bring game titles including “World of Warcraft” and “Call of Duty” under Microsoft’s control. Other synergies with Microsoft’s Azure network and with its Game Pass gaming subscription plan may be just as significant.

A year ago, Game Pass had 18 million subscribers worldwide. When the deal was announced on Tuesday, Microsoft said that number had increased to 25 million.

Sony’s PlayStation Plus recorded 47.2 million subscribers at the end of Sept. 2021, compared with 45.9 million a year earlier. Monthly active users of its PlayStation Network, however, decreased from 108 million to 104 million.

While the deal news initially dented Sony’s stock, it lifted the shares of other Japanese games companies, moves that financial analysts said may suggest the firms are seen as potential acquisition targets. Shares of Square Enix, Capcom and Konami all climbed by more than 5%. X’s Ubisoft Entertainment shares rose by 11% on Wednesday.

Square Enix was up a further 2.5% at JPY5,710 at the Thursday lunchtime trading break. Capcom was up a further 2.2% at JPY2,644. Konami was up a further 5.3% at JPY5,600. Nintendo was up 2.4% at JPY54,540 at Thursday lunch.

Sony shares had reached a multi-year high of JPY15,520 on Jan. 5, 2022, reflecting a combination of factors including: the theatrical success of “Spider-Man: No Way Home”; the apparent success of its decision not to compete directly in the streaming wars between Hollywood studio groups; and having come through the COVID pandemic in a strong financial shape that makes the group a likely buyer, not a seller.

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