Microsoft and Activision Blizzard extend deadline for $75 billion merger

Microsoft and Activision Blizzard said they have agreed to extend the deadline for their $75 billion merger to mid-October, a move that will allow them to continue efforts to obtain regulatory approval in the UK.

The companies, which originally planned to close the deal by Tuesday, have until October 18 to complete the transaction, which would give Microsoft ownership of Activision’s vast portfolio of videogames, including Call of Duty, Also included are games from hit series like Candy Crush and more. world of Warcraft.

The companies agreed to increase the termination fee from $3 billion to $3.5 billion if the transaction is closed after August 29, and to $4.5 billion if the deal is canceled after September 15.

Microsoft vice chairman and president Brad Smith said on Twitter that the extension would provide “ample time” to resolve remaining regulatory issues. “We are confident of our chances of taking this deal to the finish line,” he added.

A spokesperson for Activision Blizzard reiterated Smith’s comments about the early closing of the deal.

Activision also released its second quarter financial results, which showed that revenue increased 34% from a year earlier to $2.21 billion. Earnings more than doubled to $587 million, and net bookings climbed 50%. Microsoft is expected to present its quarterly results on Tuesday.

Activision said its board has approved a dividend of 99 cents payable on August 17. The company last paid an annual dividend of 47 cents in April 2022.

Activision shares have rallied recently as investors bet the deal is more likely to close. They ended trading at $92.74 on Tuesday, up 10% from July. The deal is priced at $95 per share.

Shares of Activision fell 0.4% in morning trading on Wednesday, while Microsoft’s stock was flat.

Microsoft announced its plans to buy Activision in January 2022 and valued the deal at $69 billion after adjusting the videogame publisher’s net cash. Companies secured regulatory approval in Europe, China and other markets, but faced hurdles in the US and UK

A US federal judge last week denied the Federal Trade Commission’s bid to block the transaction while the agency appeals a trial court judge’s July 11 ruling. If a judge declines an injunction, the FTC often drops its opposition to the deal, which happened with Meta Platforms’ acquisition of virtual-reality company Within Unlimited.

The UK’s Competition and Markets Authority is now the only major obstacle to closing the deal. The regulator has said it worries the merger could harm the emerging market of cloud gaming, or streaming of videogames over the Internet, although last week it agreed to consider restructuring the acquisition. The UK regulator said it would need to scrutinize any changes made afresh, but did not say how long it would take.

With the purchase of Activision, Microsoft is looking to expand its limited presence in mobile gaming, which is by far the largest segment of the videogaming industry by revenue. The software giant is also looking to grow the portfolio of titles for its videogame subscription service Game Pass, including cloud gaming.

Closing the Activision deal is critical for Microsoft to achieve those goals. Outside of China, there are only a few game companies with large portfolios that Microsoft could potentially acquire.

To woo regulators over the past 18 months, Microsoft has joined Nintendo, Nvidia and other rivals in a deal to make Call of Duty, one of the game industry’s most popular franchises, equally accessible to players on its platform over a 10-year period. compromised with. On Sunday, Sony Group, one of the biggest critics of the acquisition, agreed to the same arrangement.

If Microsoft can overcome the final hurdles and complete the deal, the acquisition will boost its videogaming business and win its efforts to dominate agencies that are more open to how big tech deals are reviewed. have become strict.