Microsoft and Activision Blizzard agree to extend the merger agreement through October

Microsoft and Activision Blizzard They agreed to extend the merger agreement pending the outcome of negotiations with UK regulators. Both parties will have until October 18th to complete the deal, having missed the original deal deadline yesterday.

“The recent decision in the US and approvals in 40 countries all confirm that the deal is good for the competition, the players and the future of gaming.” chirp Lulu Cheng Meservy, Activision Blizzard’s Chief Operating Officer and Executive Vice President, Corporate Affairs. “Given global regulatory approvals and the companies’ confidence that the CMA now understands there are remedies available to address their concerns in the UK, the boards of Activision Blizzard and Microsoft have authorized the companies not to finalize the deal until after October 18th.”

Vice President and President of Microsoft says Brad Smith The three-month extension is designed “to provide ample time to work through final organizational matters.”

Microsoft and Activision Blizzard also agreed to higher termination fees and new commercial arrangements for the transaction. The termination fee, payable if Microsoft or Activision walk away from the deal, is now set at $3.5 billion if the deal doesn’t close by August 29, rising to $4.5 billion if September 15 passes without closing.

Activision has also agreed to potentially “hold the separate company, certain company assets, or implement other legal alternatives to concluding the merger” with UK regulators.

The delay is due to Microsoft’s ongoing negotiations with the Competition and Markets Authority (CMA). The UK regulator originally blocked the deal over cloud gaming concerns earlier this year. While Microsoft has appealed this decision, the company is also preparing It is said progress A new proposal to sell its UK cloud gaming rights to try to sidestep the deal.

The extension of the merger follows the Case Management Conference in the UK on Monday, where the Competition Appeals Tribunal (CAT) agreed to allow Microsoft and the CMA to negotiate a way to close the deal and pause the appeals process. The CMA clarified earlier this week that Microsoft has yet to submit its final proposal, and the regulator now has until Thursday at midday to submit all relevant evidence to the CAT to formally place an appeal halt. .

Meanwhile, the CMA also said earlier this week that it will now issue a final order by August 29. Microsoft had originally planned to close the Activision Blizzard deal by July 18th, but the complicated situation in the UK added some extra time to the process. While there is plenty of regulatory work to be done in the UK to analyze a change in the transaction, Microsoft is extending the deadline for the deal to avoid falling through if Activision Blizzard decides to walk away or the unlikely scenario of another company trying to make an offer of better acquisition terms.