Microsoft continues to pull out all the stops to secure its $69 billion acquisition of gaming giant Activision Blizzard, as deal is extended
Microsoft’s and Activision Blizzard have agreed to extend their deal deadline in an effort to secure UK regulatory approval.
Microsoft’s proposed $68.7 billion (£53bn) acquisition of Activision Blizzard, first announced in January 2022, had a 18 July closing date. If Microsoft failed to complete the acquisition by that deadline, it could end up owing Activision Blizzard a termination fee of up to $3bn.
Now with that deadline expired, both parties have announced they have extended the close of their $69 billion deal by three months to 18 October, as they seek approval from the UK regulator.
The decision was announced by Microsoft’s President Brad Smith in a tweet on Wednesday.
“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,” he tweeted. “We will honor all commitments agreed upon with the EC and other regulators and continue to work with the CMA on the issues raised in the UK. We are confident about our prospects for getting this deal across the finish line.”
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 amended deal has also increased the breakup fee that Microsoft owes Activision in case either side scraps the takeover – to $3.5 billion from $3 billion, if it does not close by 29 August and to $4.5 billion after 15 September.
The deal had been opposed by both the UK and US regulators, which forced the companies to miss their original cutoff date of 18 July.
Last week a federal judge in San Francisco had denied the Federal Trade Commission’s motion for a preliminary injunction to stop Microsoft closing the deal before the 18 July deadline – paving the way for Microsoft to potentially close the acquisition.
The FTC then appealed that ruling.
Microsoft however also needs to address the UK regulator’s objections, after the Competition and Markets Authority (CMA) in April officially blocked the deal, citing potential harm to the nascent market for cloud gaming.
Microsoft and Activision appealed against the CMA ruling (which was due to be heard on 28 July) and Microsoft President Brad Smith has previously met with the UK’s Chancellor Jeremy Hunt in London for talks on the matter.
Following the US court ruling, the UK’s CMA said last Friday it would extend the deadline for its review of the deal.
The extension would give the CMA more time to review proposals by the two companies to resolve its concerns, after it called for new submissions on Wednesday.
The CMA has told Microsoft and Activision Blizzard they could negotiate a new solution if the companies were to restructure the buyout.
Microsoft had sought to allay regulatory concerns by agreeing to license the “Call of Duty” game franchise to rivals, including a 10-year contract with Japan’s Nintendo Co, contingent on the merger closing.
This week Microsoft has struck a 10-year deal with Sony to keep Call of Duty on the PlayStation platform, similar to the earlier arrangement reached with Nintendo.