Microsoft, Activision Watch Hurdles to $69 Billion Deal Fall

Microsoft Corp. and Activision Blizzard Inc.  — the video-game empire it’s seeking to take over in a $69 billion deal — are edging closer to completing one of the biggest acquisitions of all time.

(Bloomberg) — Microsoft Corp. and Activision Blizzard Inc.  — the video-game empire it’s seeking to take over in a $69 billion deal — are edging closer to completing one of the biggest acquisitions of all time.

Over the weekend, Microsoft struck a deal with Sony Group Corp., arguably the staunchest opponent to the takeover, to ensure Activision’s popular Call of Duty franchise remains on Sony’s PlayStation platform for a decade. Two days earlier, a US court cleared another roadblock when it denied a request by the US Federal Trade Commission to put the acquisition on hold.

Read More: Microsoft Agrees to Keep ‘Call of Duty’ on Sony PlayStation 

The companies are working to assuage fears about what the merger of one of the industry’s biggest console makers and one of the biggest gamemakers would mean for rivals. The FTC’s defeat last week leaves only the UK’s Competition & Markets Authority, which, after vetoing the deal in April, has decided to give Microsoft a second chance to offer a remedy. 

Read More: FTC Loses Appeal Bid to Block Microsoft-Activision Deal

The CMA negotiations are going to the wire. Microsoft has a July 18 deadline to complete the deal and avoid paying Activision a $3 billion breakup fee. Pushing the deal to completion without UK regulator sign-off would breach UK laws and could lead to a fine of 5% of the companies’ combined global revenue.

On Monday, UK judges at London’s Competition Appeal Tribunal are to consider whether Microsoft’s proposed restructuring of the deal offers a way to sidestep the UK’s veto decision. The companies are considering giving up some control of their cloud-gaming business in the UK as a way to clinch the deal, Bloomberg has reported.

Read More: Microsoft, CMA Ask Court for Pause to Consider Activision Tweaks

Activision rose 2.9% to $92.64 at 10:05 a.m. in New York, just under the $95 a share Microsoft offered when the deal was announced in 2022. Microsoft was little changed at $343.92. 

“Seems a good situation to be in as we await word of either imminent close or potentially increased consideration to extend past tomorrow’s deadline,” said Cabot Henderson, a merger arbitrage strategist at JonesTrading.

–With assistance from Yiqin Shen.

(Updates with comment from merger arbitrage specialist in final paragraph.)

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