After failing to finalise its merger agreement in time for the July 18th deadline, Microsoft and Activision Blizzard have now agreed to a three-month extension until October 18th to close the $69 billion deal. Microsoft has already won the battle against the U.S. watchdog but must now reach a concession with the UK’s Competition and Markets Authority (CMA) to close the merger.
In a tweet, Microsoft President Brad Smith said the extension will “provide ample time to work through the final regulatory issues.” He added that the company will “honour 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.”
Microsoft was obligated to pay a $3 billion breakup fee if it worked away without an extension due to its inability to complete the merger. Under the new extension agreement, Microsoft will have to pay a $3.5 billion termination fee should it decide to terminate the deal and the merger is not completed by August 29th. The termination fee will rise to $4.5 billion if the deal is not closed by September 15th. Activision is also entitled to pay $0.99 per share to its shareholders.
In a tweet on Wednesday, Xbox chief Phil Spencer said, “We’re optimistic about getting this done and excited about bringing more games to more players everywhere.” If the acquisition is completed, Microsoft will be in charge of blockbuster franchises like Call of Duty and Diablo. Activision announced a second-quarter solid earnings result thanks to performances from these franchises.
Microsoft, Activision and the CMA have submitted a joint proposal to the Competition Appeal Tribunal to delay the litigation in the UK to address the CMA’s concerns. The tribunal granted a two-month pause on Monday, giving the CMA enough time to review Microsoft’s new proposal. The CMA has given itself until the 29th of August to issue a final order but said its decision timing might be faster.