Activision, Microsoft extend deal deadline to secure UK approval

Activision, Microsoft extend deal deadline to secure UK approval
FILE PHOTO: Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard’s games characters in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

:Activision Blizzard and Microsoft on Wednesday extended the deadline for the close of their $69 billion deal by three months to Oct. 18 as the U.S. companies work to secure UK approval for the biggest gaming deal in history.

The amended agreement also increases the deal termination fee to $3.5 billion from $3 billion if it does not close by Aug. 29, and to $4.5 billion after Sept. 15.

The companies originally agreed to close the deal by July 18, but U.S. regulatory efforts to block the takeover and Britain’s push to restructure it have delayed the close.

The U.S. Federal Trade Commission’s (FTC) bid to temporarily stop the deal was denied twice, first by a federal judge and then by an appeals court.

Britain’s Competition and Markets Authority (CMA) had earlier decided to block the deal, but reversed course last week and extended its deadline for a final ruling to Aug. 29 after the U.S. court ruling left Britain alone in opposition.

Microsoft was trying to extend the contract to make sure Activision is not wooed by another potential acquirer or has a change of heart, Reuters reported earlier this week.

Activision also posted second-quarter earnings on Wednesday, with bookings and adjusted profit breezing past market estimates thanks to the strength of its “Call of Duty” franchise.

“We expect to deliver strong financial performance for the full year, driven by the successful reinvigoration of the Diablo franchise,” CEO Bobby Kotick said.

Activision shares were little changed on the news, while Microsoft traded 0.5 per cent higher after a series of price target increases from brokerages including Barclays.

The companies have faced varying concerns over their deal from regulators in the UK and the U.S.

The FTC said the deal could let Microsoft degrade Activision’s game quality or player experience on rival consoles like Nintendo and Sony Group Corp’s PlayStation, as well as manipulate pricing or change terms or timing of access to Activision content.

The CMA questioned whether the deal could hinder competition in the cloud gaming industry, where users can play on any device using subscriptions such as the Xbox Game Pass that offer a wide selection of games.

Microsoft responded to these concerns by offering 10-year licensing deals to rivals after the deal closes. The latest was an agreement with Sony Group to keep “Call of Duty” on PlayStation, the biggest competitor to Microsoft’s Xbox.


Source: Reuters