Microsoft and Activision Blizzard have agreed to extend the deadline for closing the $69 billion merger deal. The companies have already received approval from all regulators except the UK Competition and Markets Authority (CMA) and more time is needed to finalize negotiations with the CMA. Both parties now have until October 18 to close the deal, following the original closing deadline yesterday.
“The recent US decision and approvals in 40 countries confirm that the deal is in the interest of competition, gamers and the future of the gaming industry,” tweeted Lulu Cheng Meservey, Activision Blizzard COO and chief corporate officer. — Given approval from global regulators and companies’ confidence that the CMA now recognizes the availability of remedies to address potential issues in the UK, the boards of directors of Activision Blizzard and Microsoft have allowed the companies to wait until October 18 to terminate the deal“.
According to Brad Smith, Microsoft vice chairman and president, the three-month delay is intended to “to allow sufficient time to process the latest regulatory issues“.
Both Microsoft and Activision Blizzard have also agreed on a higher amount of compensation that one or the other party must pay to the other in the event of the transaction being aborted. Should Microsoft or Activision pull out of the deal, the amount of compensation is now $3.5 billion if the deal is terminated after August 29, rising to $4.5 billion if the deal is not terminated will be completed by September 15th.
Activision also agreed “split the company or any portion of its assets or take other legal action to complete the mergerThis is crucial as it could allow the merger to proceed if there are restrictions from the UK Competition and Markets Authority.
The three-month delay is due to ongoing negotiations between Microsoft and the CMA. Initially, the UK regulator blocked the deal as it saw damage to the cloud gaming services market. Although Microsoft has appealed the decision, the company is also preparing a new bid to sell its UK cloud gaming rights in a bid to get the deal approved.
The merger extension comes after a hearings conference in the UK on Monday, at which the Competition Appeals Tribunal (CAT) agreed to allow Microsoft and CMA to negotiate completion of the deal and stay the appeals process. Earlier this week, the CMA announced that Microsoft has yet to submit its final proposal, and now the regulator has until Thursday afternoon to provide CAT with all the evidence needed for the tribunal’s judges to formally announce the stay of the appeal.
Microsoft originally planned to close the deal with Activision Blizzard by July 18, but the difficult situation in the UK has delayed this process. Reading between the lines, it turns out that Microsoft and Activision Blizzard don’t want to finalize the deal on October 18, but much earlier. The CMA also said last week that it now has until August 29 to make a final decision, with Microsoft and Activision Blizzard having agreed to increase compensation to $3.5 billion after that date. This suggests there is a real prospect of completing consideration of Microsoft’s proposal in the CMA before August 29, but the company still has plenty of time if the regulator needs to scrutinize changes to contract terms more closely.
Finally, in an internal message to Xbox employees, Microsoft Gaming CEO Phil Spencer said he was “optimistic” the deal would go through:
Microsoft and Activision Blizzard remain optimistic that our merger will be completed, which is why we have mutually agreed to extend the merger agreement through October 18, 2023. While we are technically able to complete the deal in the US due to recent legal changes, this extension gives us additional time to resolve remaining regulatory issues in the UK.
I want to thank everyone for the time and energy you put into helping the regulatory process and for the great job Xbox has done this year. Gamers around the world will be delighted with an incredible selection of games coming out over the next few months, including Starfield and Forza Motorsport. We also appreciate the amazing work the ABK teams are doing for their players in successfully launching Diablo IV and making Call of Duty: Modern Warfare II so popular, and we congratulate them on these achievements.
As we near the finish line, we’re more excited than ever to continue our mission of making new games for new players.“.