Microsoft and Activision Blizzard have agreed to extend their merger agreement pending the outcome of negotiations with UK regulators. Both parties will now have until October 18th to finalize the transaction, after missing yesterday’s original deal deadline.
MSFT, Activision push deal deadline
Activision has agreed to give Microsoft three more months to finalize details of their planned $69 billion merger. The agreement to push the original July 18 deadline to Oct. 18 also raises the breakup fee that Microsoft needs to pay Activision if the deal is terminated after Aug. 29 to $3.5 billion, from $3 billion, and to $4.5 billion after Sept. 15. Both Activision and Microsoft, LinkedIn’s parent company, say they will continue to seek necessary regulatory approvals to clinch the biggest video-game deal ever. Microsoft’s purchase of the game maker would combine the Xbox console with the publisher of titles including “Call of Duty.”
Related developments in the deal:
- Microsoft has signed an agreement with Sony to allow video game franchise “Call of Duty” to remain on PlayStation, once it acquires gaming firm Activision Blizzard.
- U.K. discussions on the deal are expected to take several days or weeks to resolve, and regulators have extended the target date to Aug. 29.
- A federal judge last week found that Microsoft’s takeover of Activision would not lead to unfair consolidation.
By Ruiqi Chen, Editor at LinkedIn News
Microsoft and Activision Blizzard extend merger agreement to October
There’s a small delay to Microsoft’s proposed Activision Blizzard acquisition to resolve the UK regulatory situation.
“The recent decision in the US and approvals in 40 countries all validate that the deal is good for competition, players, and the future of gaming,” tweeted Lulu Cheng Meservey, Activision Blizzard’s CCO and EVP of corporate affairs. “Given global regulatory approvals and the companies’ confidence that CMA now recognizes there are remedies available to meet their concerns in the UK, the Activision Blizzard and Microsoft boards of directors have authorized the companies not to terminate the deal until after October 18.”
Microsoft vice chair and president Brad Smith says the three-month extension is designed “to provide ample time to work through the final regulatory issues.”
Both Microsoft and Activision Blizzard have also agreed to a higher termination fee and new commercial arrangements for the transaction. A termination fee, payable if Microsoft or Activision walks away from the deal, is now set at $3.5 billion if the deal doesn’t close by August 29th, and it jumps to $4.5 billion if September 15th passes without a finalization.
Activision has also agreed to potentially “hold separate the Company or certain assets of the Company or to implement other lawful alternatives to consummate the Merger” with UK regulators. This is a key part, as it may allow the merger to go ahead with restrictions from the UK’s Competition and Markets Authority (CMA).
This three-month delay is related to Microsoft’s ongoing negotiations with the CMA. The UK regulator originally blocked the deal over cloud gaming concerns earlier this year. While Microsoft has appealed that decision, the company is also preparing to reportedly offer a new proposal to sell off its rights to cloud gaming in the UK to try and get the deal over the line.