Microsoft and Activision recently announced the extension of their merger deadline by three months, now set for October 18, 2023. The original deadline was July 18, but the decision to extend comes as both companies seek to address “remaining regulatory concerns” surrounding their $68.7 billion acquisition, initially announced in January 2022.
In a joint press release, the companies emphasized their commitment to resolving regulatory issues, leading to a successful closure of the transaction. However, if the deal does not close, the agreement sets out termination fees payable to Microsoft on August 29 and September 15, which will increase from $3 billion to $3.5 billion and $3.5 billion to $4.5 billion, respectively.
While optimistic about the acquisition’s completion, Microsoft’s Xbox chief, Phil Spencer, acknowledged the need to resolve regulatory concerns in the UK. The acquisition has faced opposition from both the US Federal Trade Commission and the UK’s Competition and Markets Authority (CMA), with the CMA blocking the deal in April due to concerns about weakening competition.
Notably, the European Union’s competition commission approved the acquisition in May, leaving the UK as the primary obstacle to the deal’s closure. The CMA has extended its deadline to consider detailed submissions from Microsoft and Activision, and it has signaled a possible route to rework the deal if the companies choose to modify it.
The UK market’s significance makes it crucial for both companies to find a solution that satisfies the CMA and allows them to continue business operations. Reports suggest that Microsoft and Activision may consider relinquishing some control of their cloud gaming business in the UK to appease the CMA.
As the companies work towards a resolution, the extension of the merger deadline provides additional time for negotiations with regulatory authorities, with hopes of successfully finalizing the acquisition.
