In an unprecedented move, Activision Blizzard and Microsoft have agreed to extend the deadline for their monumental $75 billion deal by an additional three months, now set to close on October 18. This extension was necessitated by the companies’ ongoing efforts to secure approval from UK regulators, which became a crucial step due to recent endeavors by US regulators to block the takeover and Britain’s insistence on a restructuring plan.
Microsoft President Brad Smith took to Twitter to express confidence in the deal’s ultimate success, stating that the extended timeline would allow them ample opportunity to address any remaining regulatory concerns. Additionally, the revised agreement includes an increase in the fee that Microsoft will owe Activision; if the deal fails to close by August 29, the amount will rise from $3 billion to $3.5 billion, increasing further to $4.5 billion after September 15. This adjustment ensures that Microsoft has a stronger incentive to see the deal through to completion and prevents Activision from being courted by other potential buyers.
Should the takeover go through, Microsoft’s position in the gaming industry will be significantly bolstered with the addition of popular titles such as “Call of Duty” and “Diablo.” These acquisitions will position Microsoft as a formidable contender against competitors Tencent and Sony in the gaming market. The strength of these titles was evident in Activision’s recent quarterly earnings report, which exceeded market expectations in terms of net bookings and adjusted profit.
CEO Bobby Kotick expressed optimism about Activision’s financial performance for the full year, attributing it to the successful revitalization of the “Diablo” franchise. Despite the positive outlook, early morning trading saw slightly lower shares for Activision, while Microsoft’s stock remained largely unaffected.
The decision to extend the deadline arose amidst an array of concerns from regulators in both the US and the UK. The Federal Trade Commission (FTC) voiced worries about the possibility of Microsoft undermining game quality and player experience on rival consoles like Nintendo and Sony’s PlayStation, as well as manipulating pricing or altering terms and access to Activision content. On the other hand, the UK’s Competition and Markets Authority (CMA) questioned whether the deal would impede competition in the cloud gaming sector, where users can access a wide variety of games across different devices through subscription services like the Xbox Game Pass. Microsoft sought to address these concerns by offering 10-year licensing agreements to competitors after the deal’s completion. Most notably, they recently struck a deal with Sony Group to ensure that “Call of Duty” remains available on PlayStation, Microsoft’s primary competitor.
This extended deadline serves as a testament to the significance and complexity of the Activision Blizzard and Microsoft deal, as the companies navigate regulatory hurdles and work towards finalizing one of the largest gaming mergers in history.
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