Microsoft has extended its merger agreement deadline with Activision Blizzard and now has until October 18, 2023, to complete its $68.7 billion acquisition of the Call of Duty publisher. The deal had initially been expected to complete by July 18.
Breaking the news on Twitter, Microsoft president Brad Smith said the extension should provide both companies with “ample time” to work through the final regulatory issues.
“We will honor 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,” added Smith.
Under the terms of the extension, Microsoft confirmed that Activision Blizzard is entitled to pay $0.99 per share to its shareholders, and said “both parties have agreed that the deal termination fee is not subject to any condition other than failure to close.”
“If the deal does not close by August 29, 2023, the termination fee payable by Microsoft if the agreement is terminated will increase from $3 billion to $3.5 billion,” reads the extension. “If the deal does not close by September 15, 2023, it will increase from $3.5 billion to $4.5 billion. Any termination fee will only be paid if the deal fails to close.”
Microsoft and Activision Blizzard enter the home stretch
Although the colossal merger has faced heavy resistance from regulators in the UK (CMA) and U.S. (FTC) and its main hardware rival Sony, Microsoft has spent the past few weeks clearing a path to the finish line.
The company beat the FTC at court after the regulator failed to convince a judge the deal will negatively impact consumers. The FTC is appealing the decision, but failed in two separate bids to prevent the merger from closing while it does so.
Sony also finally accepted a binding agreement from Microsoft to ensure Call of Duty remains on PlayStation platforms for the next decade, should the merger seal approval. The Japanese company had previously indicated it wouldn’t accept the agreement, which Microsoft publicly tabled earlier this year, but changed its mind after the FTC lost in court.
UK regulator the Competition and Markets Authority has now emerged as the final boss at the heart of Microsoft’s regulatory labyrinth. The CMA blocked the merger earlier this year after finding the deal could potentially allow Microsoft to dominate the nascent cloud market for years to come.
The CMA, however, recently delayed its final ruling on the deal by six-weeks after receiving a “detailed and complex” submission from Microsoft that suggests the Xbox maker is willing to make some concessions to ensure the deal is approved in the UK.