Microsoft has agreed to extend the deadline for its $68.7 billion acquisition of Activision Blizzard by three months to October 18, 2023.
The deal has been pending for 18 months and the closing was expected to happen by July 18, but regulatory delays have held up the closing. If the deal doesn’t close by October 18, then Activision Blizzard will get a higher breakup fee of $4.5 billion, compared to the previous breakup fee of $3 billion.
In addition, Activision Blizzard’s board said it will pay shareholders a one-time dividend of 99 cents a share, worth a total of $770 million.
So the two companies had to renew the merger agreement. The Federal Trade Commission last week lost its bid last week to stop the merger on antitrust grounds after both a federal judge and an appeals court sided with Microsoft on letting the deal go through.
“The recent decision in the U.S. and approvals in 40 countries all validate that the deal is good for competition, players, and the future of gaming,” said an Activision Blizzard spokesperson in an email to GamesBeat. “Given global regulatory approvals and the companies’ confidence that CMA now recognizes there are remedies available to meet their concerns in the UK, the Activision Blizzard and Microsoft boards of directors have authorized the companies not to terminate the deal until after October 18. We’re confident in our next steps and that our deal will quickly close.”
Microsoft has an incentive to close the deal sooner, as the breakup fee goes from $3 billion to $3.5 billion if it doesn’t happen by August 29.
After the FTC, the last hurdle to overcome is an agreement with the United Kingdom’s CMA regulatory body, which had indicated it was worried about competition in the nascent cloud gaming market. But Microsoft has done agreements with cloud gaming rivals to make games available on cloud services such as GeForce Now for at least 10 years.
Microsoft also announced on Sunday that Sony will be able to publish Call of Duty on the PlayStation platform for at least 10 years. These agreements are aimed at alleviating regulator concerns about Microsoft controlling key intellectual properties or technologies in games.