Acquisition extended: Microsoft and Activision Blizzard continue their deal until October

Acquisition extended: Microsoft and Activision Blizzard continue their deal until October

Revised Article:

Microsoft and Activision Blizzard have extended their deadline to finalize the (US) $75 billion merger agreement until mid-October due to some pesky UK regulatory worries about its impact on the burgeoning cloud gaming biz. The extension, running until October 18th, doesn't alter the original all-cash purchase price of (US) $95 per share that Microsoft will shell out for Activision, the brains behind hit games like Call of Duty and Candy Crush Saga.

Bump in Termination Fee

Now, if this deal goes south after September 15th, Microsoft would owe Activision a whopping $4.5 billion as a termination fee—a significant increase from the initial amount. Microsoft's top dog, Brad Smith, remains optimistic about suppressing these UK regulatory issues and has promised the company will stick to all the commitments they promised the European Commission and other regulators. The duo initially set a 18-month deadline for this union back in January 2022, to grab global regulatory clearances. A recent court decision in the US didn't deter the deal's closure. Although, back in April, the UK's Competition and Markets Authority (CMA) raised concerns that could potentially nix the transaction.

Optimistic About UK's Woes

Both parties are hopeful about ironing out the UK's wrinkles and have received approvals from regulators in 40 countries. They reckon the deal brings sole benefits to competition, gamers, and the future of gaming. The additional time grants the companies a chance to answer the CMA's concerns and submit amendments if required. Despite US bumps in the road, such as a separate complaint from the Federal Trade Commission and an in-house court hearing from August 2nd, both parties trust the deal will eventually seal with flying colors.

The acquisition of Activision Blizzard by Microsoft is a colossal move in the gaming industry and is making headlines worldwide. With cloud gaming gaining traction, issues about competition and market dynamics have surfaced. The prolonged deadline gives Microsoft and Activision a chance to squash these concerns and work towards a successful marriage that could reshape the gaming scene. However, they'll need to finesse regulatory scrutiny in multiple jurisdictions to seal the deal without a hitch.

Green Light in the US

Recently, a California judge gave Microsoft the go-ahead to gobble up Activision Blizzard despite an antitrust case initiated by the FTC. Judge Jacqueline Scott Corley rejected the FTC's plea for a preliminary injunction after weighing both parties' arguments. She acknowledged the deal's colossal status as the tech industry's largest ever and stressed the need for scrutiny. However, Judge Corley deemed Microsoft's promises to preserve Call of Duty on PlayStation for a decade, ensure parity with Xbox, extend the game to Nintendo Switch, and bring Activision's content to cloud gaming services satisfactory. Microsoft's commitment to multi-platform availability aligns with the ruling, but the deal's completion hinges on negotiations with the UK's Competition and Markets Authority.

Related Topics:

Betsson all set for record second quarter earnings

Join us at SiGMA Manila Summit today !

Additional Insights

• The initial worry with Microsoft's acquisition was too much control over Activision Blizzard titles, which could constrain competition in cloud gaming.
• To address these concerns, Microsoft made concessions such as ten-year licensing agreements with rivals like Nintendo and NVIDIA, ensuring continued access to key Activision titles.
• Additionally, Activision Blizzard divested their cloud-streaming rights outside the European Economic Area (EEA) to Ubisoft, preventing Microsoft from having exclusive control over these games in non-EEA regions.
• The UK's Competition and Markets Authority initially nixed the deal but reconsidered its decision after Microsoft made these concessions.
• The US Federal Trade Commission had appealed a lower court's decision permitting the merger, but this appeal was rejected by the US 9th Circuit Court of Appeals in May 2023.
• With major regulatory hurdles out of the way, Microsoft can now integrate Activision Blizzard into their gaming ecosystem, including Xbox Game Pass and xCloud, while preserving competition through agreements with competitors.

1. Despite the UK's concerns about the impact on the cloud gaming business, Microsoft and Activision Blizzard have extended their deadline to finalize the $75 billion merger agreement until mid-October.
2. If the deal between Microsoft and Activision Blizzard terminates after September 15th, Microsoft would owe Activision a termination fee of $4.5 billion.
3. Brad Smith, Microsoft's top dog, remains optimistic that the UK regulatory issues can be resolved, and the company will fulfill the commitments it promised the European Commission and other regulators.
4. The acquisition of Activision Blizzard by Microsoft will bring benefits to competition, gamers, and the future of gaming, but the deal will require navigating regulatory scrutiny in multiple jurisdictions to be completed successfully.

Read also: