(Bloomberg) – Microsoft Corp. and Activision Blizzard Inc. are nearing the finish line of their $69 billion deal, but likely won’t close until Tuesday’s deadline, people familiar with the deal said.
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The companies do not plan to walk away from the deal and will continue to seek final regulatory approvals needed to close, said the people, who declined to be named because they were not authorized to speak publicly about the deal. question.
Microsoft and Activision declined to comment.
Regulatory momentum has shifted in favor of the deal in recent days, with the US Federal Trade Commission failing to block it in court and the UK Competition and Markets Authority announcing an unprecedented decision to begin further discussions on ways to allay the UK government’s concerns. Still, progress probably isn’t fast enough to seal the deal by Tuesday’s milestone.
The potentially missed deadline underscores the leverage wielded by regulators in the UK, one of the biggest markets for Microsoft and Activision games and consoles. The AMC fears the deal will reduce competition and innovation and provide players with fewer options. Microsoft, which struck the deal 19 months ago to become a stronger games company with a foothold in mobile games, had to compromise, agreeing to give rivals Sony Group Corp. and Nintendo Co. access to Call of Duty games from Activision.
The merger agreement set July 18 as the date the two companies could exit, with Microsoft required to pay Activision $3 billion if the acquisition is terminated. The companies could proceed under the current deal, which would allow Activision to withdraw at any time. They could also seek to modify the agreement, but this would open the possibility of changes in the financial conditions.
UK regulators vetoed the deal in April amid concerns over its impact on the cloud gaming market. A May 5 order bars companies from completing the purchase, even though it has now received government approval in 39 countries. The CMA has so far maintained its veto as negotiations continue.
A breach of the UK order would result in fines of up to 5% of the companies’ combined global turnover. UK law enforcement could choose to change their order to allow Microsoft and Activision to shut down outside the UK while keeping the companies separate inside the country.
Discussions in the UK are expected to take several days or weeks to resolve, and the CMA has officially extended its target date on the investigation until August 29.
(Updates with additional details in the sixth paragraph)
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