Microsoft and Activision Blizzard are also expected to negotiate a new merger termination date after U.K. regulators extended the deadline for a final decision to push ahead with the acquisition beyond the current July 18 deadline. Both Microsoft and Activision Blizzard are leaning toward extending the merger deadline, the sources said.
The US Federal Trade Commission (FTC) requested an injunction to complete the merger pending the conclusion of a months-long appeals process, but a US appeals court rejected the injunction application, allowing Microsoft to acquire Activision Blizzard in the US without hindrance. The FTC still plans to start its internal administrative case process next month, though.
There is only one potential obstacle remaining, and that is the UK Competition and Markets Authority (CMA). According to speculation, Microsoft and Activision Blizzard will extend the merger deadline while continuing negotiations with the CMA.
A few days ago, the CMA announced that it would extend the deadline for the final report from July 18 to August 29 to gain more time to consider Microsoft’s “detailed and complex application”, which means that the CMA’s final report date is far away. After the closing date of the merger agreement.
The merger agreement between Microsoft and Activision Blizzard has a clause that if the merger cannot be completed before July 18, Microsoft will pay $3 billion in compensation. Today, Microsoft and Activision Blizzard are likely to push back this merger deadline to ensure that the CMA’s final report is released before the deadline.
At the same time, Microsoft and Activision Blizzard could theoretically complete the merger before then, but it may lead to a forced sale and other subsequent troubles. Microsoft certainly wants to avoid any surprises, and it does so with this extended agreement.
The Competition Appeals Tribunal has set a case management meeting for July 17, the day before the merger termination date.
An update on the Competition Appeals Tribunal’s website shows: “A meeting has been scheduled to consider a joint application by all parties to suspend these proceedings pending further discussion between the CMA and Microsoft on July 17, 2023.”
The Competition Appellate Tribunal process may take some time, which also illustrates the need for Microsoft to delay the termination date of the agreement to acquire Activision Blizzard.
There is also speculation that Activision Blizzard may use the postponement of negotiations to obtain a higher share price premium from Microsoft, possibly raising the acquisition price from $95 to around $107, which would increase the total cost of the acquisition from $68.7 billion to $77.4 billion.
