Microsoft and Activision Extend Their Deal Deadline

Microsoft and Activision have jointly announced an extension of their merger deadline by three months, signaling their commitment to completing the $69 billion acquisition despite ongoing negotiations with the UK government. The new deadline for finalizing the deal is set for October 18, with the previous deadline being July 18.

Brad Smith, Microsoft’s vice chair and president, confirmed the extension in a Twitter post, emphasizing their dedication to working through the final regulatory issues with Activision.
In the event that the merger fails to close by August 29, Microsoft could be required to pay a breakup fee of $3.5 billion, an increase of $500 million from the initial sum, as stated in Activision’s filing with the Securities and Exchange Commission. If the deal remains incomplete by September 15, the breakup fee may escalate to $4.5 billion, according to the same filing.

Furthermore, the agreement between the companies stipulates that if the merger is ultimately abandoned and the breakup fee is paid by Microsoft, starting on October 18, the tech giant will owe Activision “100% of all proceeds or other payments for games” that belong to the latter.

Following a federal judge’s recent decision not to obstruct the acquisition from concluding, Microsoft entered into negotiations with the UK’s Competition and Markets Authority (CMA) to suspend litigation over the merger. This pause aims to allow both parties to devise solutions to address competition concerns in the UK.

A spokesperson from Microsoft expressed confidence in the deal, citing global regulatory approvals and the CMA’s recognition of available remedies to address their concerns. Both companies’ boards have thus agreed not to terminate the merger until after October 18.

Activision CEO Bobby Kotick conveyed his gratitude to the employees for their patience in a memo, assuring them of the positive impact the merger would have on players, workers, and the business. The deal has already been approved in over 40 countries, and they remain confident in resolving any remaining regulatory issues in the UK.

Similarly, in a separate memo to employees, Microsoft’s Xbox head Phil Spencer reiterated their goal of expanding gaming opportunities worldwide. He explained that while the merger can technically close in the United States due to recent legal developments, the extension allows them additional time to address any remaining regulatory concerns in the UK.