Microsoft and Activision Push Back Merger Completion Date to October 18th
Microsoft and Activision Blizzard have come closer than ever to finalizing their merger after facing regulatory obstacles for 18 months. However, due to unresolved matters in the UK, the companies were unable to complete the process by their original deadline of July 18th. Consequently, they have mutually decided to extend their merger agreement by three months in order to successfully complete the $68.7 billion acquisition.
“Microsoft and Activision Blizzard have jointly agreed to extend the July 18, 2023 deadline for the merger agreement to October 18, 2023 to provide additional time to resolve remaining regulatory issues,” Microsoft said in a statement.
If they hadn’t agreed to new terms and either side walked away (which they could have done today), Microsoft would have been on the hook for a $3 billion severance payment. The termination fee will rise to $3.5 billion if the merger is not completed by August 29, and to $4.5 billion if it is not completed by September 15. Payment is made only if the acquisition is not closed. In addition, they agreed that Activision can pay its shareholders a dividend of $0.99 per share.
“Microsoft and Activision Blizzard remain optimistic that we will complete our acquisition, so we have jointly agreed to extend the merger agreement through October 18, 2023,” Microsoft Gaming CEO Phil Spencer wrote in a note to employees. “While we are technically able to close in the US due to recent legal developments, this extension gives us additional time to resolve the remaining regulatory issues in the UK.”
Microsoft and Activision Blizzard have extended the merger agreement deadline to 10/18. We’re optimistic about getting this done, and excited about bringing more games to more players everywhere.
— Phil Spencer (@XboxP3) July 19, 2023
The Competition and Markets Authority, the UK’s antitrust regulator, initially blocked the deal in April over concerns about its impact on the cloud gaming market (the agreements signed by Microsoft with third-party cloud gaming platforms were a sufficient remedy for the European Union to approve the merger). Microsoft appealed the CMA’s decision, but just days before the deadline, the CMA announced it was ready to review the amended merger proposal.
The CMA, Microsoft and Activision submitted a joint proposal to the Court of Appeal to delay the trial for two months in an attempt to resolve the regulator’s concerns amicably. The Court of Appeal accepted the request on Monday. The CMA has also given itself six additional weeks until the end of August to evaluate Microsoft’s new proposal. However, it hopes to do so as soon as possible.
It’s not entirely clear when this will all be finalized one way or the other, but the CMA and both companies are aiming to do so soon and certainly well before October 18th. One important date to pay attention to is August 2nd. That’s when evidentiary hearings are scheduled to begin in the Federal Trade Commission’s administrative proceeding to try to block the trade. The FTC failed in its efforts to obtain an injunction to block the merger in the meantime. However, if the deal isn’t completed by August 2 and the FTC’s administrative proceedings begin, things could get complicated for Microsoft and Activision.
