Microsoft and Activision Blizzard agreed to extend their merger agreement deadline by three months to help address regulatory concerns in the UK. The new deadline is Oct. 18.
The companies originally set a deadline for July 18 to get a deal done.
The extension will “provide ample time to work through the final regulatory issues,” Microsoft President Brad Smith said in a statement. He added: “We are confident about our prospects for getting this deal across the finish line.”
Microsoft cleared a major hurdle in its $68.7 billion acquisition last week when a federal judge sided with the Redmond company following a challenge from the U.S. Federal Trade Commission to block the merger. An appeals court then denied a FTC motion to temporarily stop the deal.
Microsoft now needs to gain approval from UK regulators, which already extended their own deadline by six weeks to Aug. 29 to review the deal. The UK’s Competition and Markets Authority originally rejected the deal in April.
Microsoft previously agreed to a termination fee of $3 billion. If the deal does not close by Aug. 29, the company said today it will pay a $3.5 billion fee; if it does not close by Sept. 15, the fee goes up to $4.5 billion.
Also as part of the agreement extension, Activision is entitled to pay $0.99 per share to its shareholders. It said today that it also may seek to pursue an agreement with UK regulators “to hold separate the Company or certain assets of the Company or to implement other lawful alternatives to consummate the Merger,” according to a SEC filing.
Microsoft said Sunday that it signed a binding agreement with Sony to keep Call of Duty on PlayStation after the pending Activision Blizzard acquisition. Microsoft previously inked similar deals with Nintendo and cloud gaming providers to help ease regulatory concerns over the acquisition, which would be the largest in the company’s history.
Here’s an email from Xbox chief Phil Spencer to employees sent Wednesday, and a statement from Activision corporate affairs chief Lulu Cheng Meservey:
Team,
Microsoft and Activision Blizzard remain optimistic that we will get our acquisition over the finish line, so we have jointly agreed to extend the merger agreement to October 18, 2023. While we can technically close in the United States due to recent legal developments, this extension gives us additional time to resolve the remaining regulatory concerns in the UK.
I want to thank everyone for your time and energy in support of the regulatory process and on all the great work coming to fruition for Xbox this year. Players around the world will be delighted with the incredible lineup of games launching in the next few months, including Starfield and Forza Motorsport. It is also great to see the fantastic work the ABK teams are delivering for their players with the successful launch of Diablo IV and the ongoing performance of Call of Duty: Modern Warfare II, and we congratulate them on their accomplishments.
As we move even closer to the finish line, we are more excited than ever before about furthering our mission to bring more games to more players everywhere.
Phil
