After handing the FTC a big L and the CMA all but waiting to stamp its approval (with concessions, of course), Microsoft and Activision Blizzard are now counting the days before the mega-mergers. But, before then, it appears that Microsoft and Activision Blizzard are preparing for the possibility of things going sour at the last minute.
Microsoft and Activision Blizzard have extended the deadline for the much-anticipated buyout. It was previously scheduled to culminate on July 18, the new closing date is set for October 18. The additional three months give the tech giants ample time to iron out the last few regulatory creases and consolidate their $69 billion deal.
The deadline extension comes after a whirlwind of approvals, blocks, and negotiations. The proposed purchase secured the green light in 40 countries, including the European Union, Brazil, Japan, South Korea, and Ukraine, as well as a hard-fought win in the United States court against the Federal Trade Commission (FTC).
Together with @Activision, we are announcing the extension of our merger agreement to 10/18 to provide ample time to work through the final regulatory issues. We will honor all commitments agreed upon with the EC and other regulators and continue to work with the CMA on the…
— Brad Smith (@BradSmi) July 19, 2023
However, the UK’s Competition and Markets Authority (CMA) loomed as a challenging roadblock, initially rejecting the deal over concerns related to cloud gaming. Rather than pursuing the appeal route, Microsoft opted for negotiations with the CMA to find an agreeable compromise that would allow the deal to progress.
To ensure the deal’s completion, both Microsoft and Activision Blizzard have committed to a higher termination fee if either party decides to call it quits. The break-up fee is now set at a staggering $3.5 billion if the deal doesn’t close by August 29 and it climbs to an even more breathtaking $4.5 billion if the deal remains unresolved past September 15.
To appease the CMA, Activision Blizzard has agreed to potentially separate the company or certain assets and implement other lawful alternatives to push through with the merger. Microsoft is also reportedly mulling over the sale of its UK cloud gaming rights to appease the regulatory body.
The UK regulators’ concerns are critical since they can potentially make or break the deal. Microsoft had initially planned to wrap up the Activision Blizzard agreement by July 18, but the complications in the UK necessitated more time. Extending the deal deadline prevents it from collapsing if Activision Blizzard chose to walk away or if another company attempted to outbid Microsoft – not that anyone has a spare $70 billion lying around that they’re free to use whenever they please.
Brad Smith, Microsoft vice chair, and president noted the extension aims to provide “ample time to work through the final regulatory issues.” He also asserted the company’s unwavering commitment to meeting all agreements with the European Commission (EC) and other regulators and its resolve to continue working with the CMA on UK issues.
Lulu Cheng Meservey, Activision Blizzard’s CCO and EVP of corporate affairs, expressed her confidence in the transaction, citing the global regulatory approvals and the companies’ conviction that “CMA now recognizes there are remedies available to meet their concerns in the UK.”
Microsoft Gaming CEO Phil Spencer and Xbox head echoed these sentiments, both stating that they are “optimistic” about the deal’s eventual completion and looking forward to bringing more games to more players globally.
With the CMA expected to issue a final order by August 29, all eyes are on the tech behemoths as they navigate through the final stages of this monumental merger. The merger could potentially close by then, provided the regulator approves Microsoft’s alterations to the deal’s terms.
Ultimately, the deadline extension showcases the unwavering commitment of both Microsoft and Activision Blizzard to the success of this deal. As this landmark deal draws closer to the finish line, it signals a new era for the gaming industry with its promise to bring more games to more players everywhere.
