Microsoft's $69 Billion Acquisition of Activision Blizzard Extended to October 2023 Amid Regulatory Hurdles

Microsoft and Activision Blizzard have officially extended their merger deadline to October 18, 2023, following delays caused by ongoing regulatory reviews. This extension comes as both companies continue to negotiate terms amid scrutiny from global competition authorities.

Highlights:

• The $69 billion acquisition deadline has been extended to October 18, 2023.
• Activision Blizzard agrees to waive termination rights before this date but secures increased termination fees.
• Activision Blizzard reports its first-ever $1 billion quarter in net bookings, driven by major game releases.

Under the revised agreement, if the deal does not close by October 18, Activision Blizzard waives its right to terminate the merger. However, the company will receive an increased termination fee of $3.5 billion if the deal is canceled after August 29, 2023, and $4.5 billion if canceled after September 15, 2023.

Additionally, modifications to Activision Blizzard's commercial agreements with Xbox, valued up to $250 million for 2023 and 2024, enable the company to declare a one-time dividend of $0.99 per share.

The extension follows the Federal Trade Commission's (FTC) decision to appeal a recent court ruling that favored the merger. The court previously found insufficient evidence that the acquisition would harm competition in the gaming industry.

Meanwhile, the UK’s Competition and Markets Authority has also blocked the merger, adding to the regulatory hurdles. Despite this, Activision Blizzard’s shares have climbed over 27% since May, although they dipped slightly recently.

In its Q2 earnings report, Activision Blizzard announced a 50% year-over-year increase in net bookings, marking its first quarter surpassing $1 billion. GAAP operating income and segment operating income both rose by 70%, fueled by the successful launch of Diablo IV—the company’s fastest-selling game—and continued growth in the Call of Duty franchise.

Industry analyst Michael Pachter of Wedbush Securities commented that the FTC’s concerns stem from a misunderstanding, as the deal involves a $200 billion revenue giant acquiring an $8 billion revenue company. He also anticipates further consolidation in the gaming sector pending regulatory approval.

For more updates on this evolving story, stay tuned.

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