That would be a great pick up from MS if true. I played Hitman for the first time about 3 months back on GamePass. A fun and unique experience from anything else that is on Xbox or PS. IO is a very talented developer and if they couldn't get the license for Hitman, they could always work on a new IP or something like Perfect Dark.

Well undead labs/Playground were second party =p.   But even with new studios they attract people from other studios:

Drew Murray (Sunset Overdrive's game director) is coming out of retirement

Imho Warner Brothers or 505 Games will publish their titles for the time being, now if Hitman 3 were to sell poorly, then I'd expect them to approach Microsoft, but I think they'll give it one more try before going under another corporation umbrella

You can't just open a new studio, aqcuire all the devs that currently don't have a job (likely the bottom of the barrel) and expect that they'll make a decent game. You need experienced personnel for that.
You will always "steal" employees from other studios that way to fill your dev team. So there's no difference between buying a whole studio or acquiring a couple of employees from a dozen of other studios each. Obviously it makes more sense to buy an already winning team.

It's the same reason why we shouldn't care that once famous developer studios close down. It just doesn't matter as these employees will get picked up by other studios and improve their games.

Square owns the IP itself, IO just have the liscense to do whatever they want with it. And Im like 90% sure their would be some clause about not keeping the IP if they get acquired.

If this buyout happens, and IO's next project is a Hitman game, it will almost certainly be on the next gen consoles.  Just for fun though, where I come from, Canada, we reward courage. Also the XBO S is $300. So hypothetically, if the MS exclusive Hitman came out next month, it would cost me over $400 ( console and game ) with tax for the cheapest option available. And running it on the S, it would be a substantial step down from the Pro. The original XBO as well as the S, weren't attractive hardware to me years ago, let alone now or in the future. Buying an X and the game would run me about $775. Score! Ha. :)  My faith in PS has been shaken, so maybe, maaaayyybeee, by that time I will have at least partially migrated over to PC gaming. I need to diversify somewhat. I've put so much into PS, that even if things go south for the brand, at least as far as my own interests are concerned, jumping ship will be a huge hassle. It's not at that point yet, but PC has become an increasingly attractive option.

There's a chart out there that shows Hitman 2 having a higher player count day 1 than 2016, and also a much more consistent players per day than 2016. It's based on Steam's player count stats which is easily accessible too, so it's probably not a fabrication. Considering most of the profits of 2016 went to Square Enix, unlike 2018, I think that they'll be fine. After all losing Io Interactive and Hitman contributed to a $48 million loss, so the brand made profit already under Square

So there is absolutely nothing else that interest you on Xbox ecosystem? Even now with the huge investment in 1st party studios, and likely more to come? 

I'm pretty sure Io Interactive own the IP, otherwise every article I've read about it is just purposely vague.

https://www.polygon.com/2017/6/16/15816232/io-interactive-hitman

https://trademarks.justia.com/784/28/hitman-78428222.html

I don't think the articles are purposely vague, they are vague because Square in general has been vague about this whole deal.