Merger Extension: Microsoft and Activision Blizzard Prolong Agreement till October

Merger Extension: Microsoft and Activision Blizzard Prolong Agreement till October

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Microsoft's $75 billion takeover of Activision Blizzard, the makers of iconic games like Call of Duty and Candy Crush Saga, has extended its deadline until mid-October, due to regulatory snags in the UK over its impact on the growing cloud gaming market. This extension, lasting until October 18, leaves the original all-cash $95 share price unchanged.

Bump in termination fee

In the event that the deal unravels after September 15, Microsoft would be obligated to pay Activision a heftier termination fee, spiraling up to $4.5 billion. Microsoft President, Brad Smith, remains optimistic about tackling the UK's regulatory hurdles and affirmed the company will honor all promises made to the European Commission and other regulators. The companies initially announced the deal in January 2022, setting an 18-month deadline for global regulatory clearances. The deal has achieved approvals from regulatory bodies in 40 countries so far. Despite a recent court decision in the US that didn't halt the deal's progression, the UK's Competition and Markets Authority (CMA) has raised concerns in April that may block the transaction.

Awaiting UK's green light

Both Microsoft and Activision are hopeful about resolving the UK's concerns and are optimistic that the merger is beneficial for competition, players, and the future of gaming. The extension provides the companies with additional time to address the CMA's concerns and make necessary amendments. Although potential challenges in the US, including a separate complaint from the Federal Trade Commission due for an in-house court hearing beginning August 2, loom, both companies remain confident that the deal will close without a hitch.

The takeover of Activision Blizzard by Microsoft is causing ripples in the gaming industry and is under the spotlight of regulators worldwide. With cloud gaming gaining traction, concerns about competition and market dynamics have arisen. The extended deadline grants Microsoft and Activision the opportunity to address these concerns and steer towards a successful merger that could revolutionize the gaming landscape. However, they need to carefully navigate regulatory scrutiny in various jurisdictions to ensure a hassle-free completion of the deal.

U.S. regulatory green light

Earlier this month, a California judge sanctioned Microsoft to advance with its acquisition of Activision Blizzard, despite an ongoing antitrust lawsuit filed by the FTC. The judge declined the FTC's request for a preliminary injunction after evaluating both parties' arguments. She acknowledged the deal's historical significance and emphasized the need for prudent scrutiny. Nevertheless, Judge Jacqueline Scott Corley concluded that Microsoft's pledges to preserve Call of Duty on PlayStation for a decade, ensure parity with Xbox, expand the game to Nintendo Switch, and make Activision's content accessible on cloud gaming services were satisfactory. Despite the deal's completion being contingent on negotiations with the UK's Competition and Markets Authority, Microsoft's commitment to multi-platform availability aligns with the ruling.

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Overall:

Regulatory challenges surrounding Microsoft's acquisition of Activision Blizzard have primarily been vanquished in the US, particularly by the courts turning down the FTC's attempts to block the deal. The acquisition officially closed in 2023, and subsequent appeals decided in 2025 confirmed its legality. Meanwhile, concerns remain in the UK, with the CMA still in discussions or negotiating resolutions related to the merger.

United States Regulatory Status

• The FTC challenged Microsoft's $69 billion acquisition of Activision Blizzard, claiming it could strain competition in gaming markets like consoles, cloud, and subscription services.
• In 2023, a U.S. District Court denied the FTC's request for a preliminary injunction to prevent the deal, and the Ninth Circuit Court of Appeals upheld its ruling unanimously in May 2025, dismissing the FTC's legal challenge by a considerable margin[2][4][5].
• The merger became final in October 2023 despite the FTC's efforts to obstruct it.
• The administrative proceeding by the FTC concerning the merger is still ongoing, but it has been effectively sidetracked since the appellate court's ruling overwhelmingly supported Microsoft[1][4].
• With the FTC losing the appeal dramatically, continuing the challenge has minimal practical impact as the deal has been completed, and compelling divestitures would necessitate another extensive legal process[4].
• The FTC faces a decision on whether to carry on with its internal trial or abandon the case entirely, with withdrawing now seen as a reasonable exit strategy under the new FTC leadership[4].

United Kingdom Regulatory Status

• The CMA has inspected the merger as well.
• The CMA's final report voiced concerns that Microsoft could potentially wield Activision Blizzard's games in ways that harm competition in the market[1].
• However, specifics about any enforcement actions, resolutions, or items of discussion between the CMA after their final report are not readily available, suggesting that the situation might still be under review or negotiations.

1. The advancement in cloud technology has led to growing concerns about competition in the gaming industry, particularly with Microsoft's acquisition of Activision Blizzard, as this merger could revolutionize the landscape.
2. The integration of Activision Blizzard's portfolio, known for games like Call of Duty and Candy Crush Saga, with Microsoft's Fintech resources could open up new opportunities for technological innovations in the sports and entertainment sectors.

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