Microsoft & Activision extend deadline to close $69 billion deal under close regulatory scrutiny

Yesterday was an important day when Microsoft and Activision announced the deal 18 months earlier. Both the parties agreed that either one of them could walk away from the merger if it hadn’t close by then, which would mean that Microsoft had to potentially pay a $3 billion breakup fee unless both the parties sit for a renegotiation. 

The deadline for Microsoft’s acquisition of video game company Activision Blizzard worth $69 billion has been extended as the companies seek to close a deal that has been challenged by regulators in the United States as well as Britain’s Competition and Markets Authority.

Microsoft is believing that the deadline push to October 18 will provide the company with enough time to work through the remaining regulatory issues, said Brad Smith, Microsoft’s president.

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“We are confident about our prospectus for getting this deal across the finish line,” Smith added.

The extension in deadline has come with a bigger termination fee, should the deal be called off, and a number of other new agreements.

Yesterday was an important day when Microsoft and Activision announced the deal 18 months earlier. Both the parties agreed that either one of them could walk away from the merger if it hadn’t close by then, which would mean that Microsoft had to potentially pay a $3 billion breakup fee unless both the parties sit for a renegotiation.

The termination fee has been increased to $3.5 billion with the extension.

“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,” an Activision Blizzard spokesperson said Wednesday. “We’re confident in our next steps and that our deal will quickly close.”

In the past week, Microsoft has rigorously worked towards resolving the legal challenges from anti-trust enforcers in the US and UK, who argued that the merger would harm competition. The deal was effective to clear to go in US this week after the Supreme Court refused to hear pleas against the takeover from gamers who call themselves fans of Activision titles like Call of Duty, World of Warcraft and Diablo.

Justice Elena Kegan rejected the emergency appeal against the takeover but regulators in the UK still remains a obstacle in the deal. The competition and Markets Authority initially rejected the deal, but later pushed back its final decision so it can consider Microsoft’s agreement that new developments mean its acquisition can go through.

A judge on Monday approved joint request from Microsoft and the British regulator to delay any upcoming proceedings which would provide both sides to further negotiate. Daniel Beard, who represents Microsoft in the UK case on Monday said he was grateful that the process was moving quickly and speed is of the essence.

The judge also sought the information on Microsoft’s announcement it made on Sunday which addresses concern from its top rival in the gaming console business Sony which manufactures PlayStation. Microsoft said it has signed a deal with Sony to keep Call of Duty titles on PlayStation for at least 10 years.