Microsoft and Activision Blizzard have given each other three more months to try to complete the deal that will see Microsoft acquire Activision Blizzard. The two companies just announced they will extend the deadline to make the deal happen until October 18.
Activision Blizzard announced the new agreement in a press release centering on its latest financial results. Microsoft President Brad Smith issued his own response on Twitter. He stated:
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.
Together with @Activision, we are announcing the extension of our merger agreement to 10/18 to provide 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… pic.twitter.com/QZklZC20ZG
— Brad Smith (@BradSmi) July 19, 2023
The original deadline of July 18 expired just a few hours ago, but there were lots of unconfirmed reports which claimed there was no danger of either Microsoft or Activision Blizzard abandoning that deal. Both companies clearly want the acquisition to go through and the extra three months is likely seen as the way to accomplish that task.
Having said that, some of the terms of the acquisition deal have changed. Activision"s press release stated:
The terms of the agreement include an increase in the termination fee payable to Activision Blizzard from $3.0 billion to $3.5 billion if the transaction is terminated after August 29, 2023, and to $4.5 billion if the transaction is terminated after September 15, 2023. The agreement also includes amendments to Activision Blizzard’s commercial Xbox arrangements with Microsoft, valued at up to $250 million for each of fiscal years 2023 and 2024. The agreement further enables Activision Blizzard to declare and pay one regular cash dividend for fiscal year 2023 of up to $0.99 per share, prior to and not contingent on the closing of the transaction.
The main purpose of extending the deadline is to change the minds of the UK Competition and Markets Authority, which blocked the deal in late April. Since then, however, Microsoft and Activision Blizzard have reportedly created a new version of the deal to send to the CMA to get them to change their minds. Because of this change, the CMA has agreed to extend its own investigation of the deal, before its final order, until August 29.