Activision Blizzard Inc. agreed to give Microsoft Corp. three more months to close their $69 billion merger so the companies can iron out remaining regulatory concerns and salvage the biggest video game deal ever, after more than a year-and-a-half of fraught negotiations.
The agreement between the two companies was set to expire at 11:59 p.m. Tuesday in California. Now the companies will have until Oct. 18, according to a regulatory filing on Wednesday. The parties also increased the amount of a breakup fee that Microsoft will pay to Activision in case either side terminates the deal.
The breakup fee increases to $3.5 billion from $3 billion after Aug. 29 and to $4.5 billion after Sept. 15, according to the filing. The companies have said they don’t plan to walk away and will continue seeking the final regulatory approvals needed for closing.
The deal, if completed, would unite the maker of the Xbox game console with the publisher of popular titles such as Call of Duty. Regulators on both sides of the Atlantic have been concerned the merger would give Microsoft an anticompetitive advantage in the $182 billion games market. Microsoft has said the deal will positively impact consumers by allowing the company to distribute more games across more devices and platforms.
The UK Competition and Markets Authority, which blocked the deal in April, remains the only major hurdle to sealing the agreement. The regulator has said the merger could harm the nascent market for cloud gaming. Last week, the CMA agreed to consider a restructuring of the acquisition, though it would need to conduct a fresh investigation into any resulting changes. It’s not clear how long that would take.
The companies are considering giving up some control of their cloud-gaming business in the UK as a way to clinch the deal, Bloomberg has reported.
The US Federal Trade Commission also sought to block the merger, although a California judge last week denied the commission’s request to halt the transaction from going forward. The FTC is appealing that decision.
Author: Ed Ludlow, Dina Bass and Cecilia D'Anastasio