Despite a recent federal ruling denying the Federal Trade Commission’s attempt to block Microsoft from purchasing Blizzard Activision over antitrust concerns, the historic acquisition may still be far from a conclusion. 

On Wednesday, July 19, the Xbox manufacturer announced that the deadline of its $69 billion deal has been extended until October 18. 

While the move to extend seems like a confusing step backward in Microsoft’s years-long quest to acquire the World of Warcraft publisher, Xbox executive Phil Spencer confirmed the extension via Twitter on Wednesday, adding that the company is excited to bring the merger to fruition. 

The move comes as just one day after 21 republican lawmakers signed a letter with Congressman Kelly Armstrong (R-ND) calling on the FTC to drop its antitrust lawsuit against Microsoft, suggesting that the Commission use more common sense policies towards mergers and acquisitions.   

“The FTC’s case against Microsoft’s acquisition of Activision is the latest in a series of actions that are clearly designed to impede legitimate mergers and acquisitions, while ignoring decades of settled FTC practice across Republican and Democratic administrations,” the letter read. “Instead of protecting competition as Congress intended, the FTC has spent taxpayer resources seeking to block a deal that promises to expand consumer choice and insulate a dominant foreign company from competition.”

In the FTC case ruling, U.S. District Judge Jacqueline Corley referred to the merger as “the largest in tech history”, adding that “scrutiny has paid off.” However, in her denial of the FTC lawsuit, Corley wrote that the FTC failed to prove how the merger would substantially lessen competition. 

“To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.”

Bobby Kotick, CEO of Activision Blizzard echoed Spencer’s comments in an email to Activision employees. While Kotick did not speculate directly on the probability of the merger’s success, he said the fate of the historic acquisition will not be decided until the new deadline. 

“I know many of you have questions about our merger with Microsoft. I am happy to share that based on our continued confidence in closing our deal, the Activision Blizzard and Microsoft boards have mutually agreed not to terminate the deal until after October 18,” he wrote. “Our merger is cleared to close in over 40 countries already, and we remain confident in resolving any remaining regulatory concerns in the UK.”

While Microsoft’s latest legal victory against the FTC  essentially clears a path for the merger in the United States, the technology conglomerates must prove that the merger will maintain competitive efficiency to regulators in the United Kingdom.

In April, the UK’s Competition and Markets Authority blocked the merger in order to investigate what potential dilemmas would impact competition in the console and cloud gaming markets.   

Speaking on concerns regarding regulatory authorities in the United Kingdom, Brad Smith, Vice Chair and President of Microsoft, said the company would take this pause to focus on how to address concerns. 

 

“As we near the finish line, today’s extension with @activision enables us to focus on addressing comprehensively and properly the UK’s statutory requirements while sustaining fully our obligations across the EU.”

Smith also included more details on extension that include termination fees. Per the terms, obtained by Irvine Weekly, Microsoft could pay a termination fee of $4.5 billion if the deal “does not close” by September 15. 

Additional details related to the extension of the agreement:

  • Activision Blizzard is entitled to pay $0.99 per share to its shareholders.
  • Both parties have agreed that the deal termination fee is not subject to any condition other than failure to close.
  • If the deal does not close by August 29, 2023 the termination fee payable by Microsoft if the agreement is terminated will increase from $3 billion to $3.5 billion. If the deal does not close by September 15, 2023, it will increase from $3.5 billion to $4.5 billion. Any termination fee will only be paid if the deal fails to close.

As Xbox continues to forge cross platform partnerships, the company recently announced that Microsoft and Playstation have agreed to maintain the presence of Call of Duty on Playstation, following the merger.   

Microsoft announced similar partnerships in March, when it announced licensing agreements with gaming giants Nintendo, NVIDIA, and Ubitus.

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