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Largest All-cash Acquisition in History Hinges on CMA Decision

Michael Edgar

,

Microsoft-Activision
Microsoft is on the precipice of a ÂŁ52 billion takeover of Activision, however the Competition and Markets Authority (CMA) remains its biggest hurdle.

The U.S. Ninth Circuit Court denied the FTC in blocking the takeover last Friday, giving Microsoft the green light to close the deal in the United States. 

The US now joins the EU, Saudi Arabia, Brazil, Chile, Japan, China and South Africa in allowing the deal to go through, while countries such as New Zealand, Canada, and  Australia continue to review. The United Kingdom’s CMA is the only global regulator to outright block the merger.

The two companies have now extended the deadline for the merger to mid October, after the original agreed deadline of Tuesday came and went without a deal.

The extended deal saw Microsoft raise the termination fee to be paid to Activision in the case of a no-deal from $3bn (ÂŁ2.2bn) to $4.5bn (ÂŁ3.4bn). Along with the termination fee, Microsoft would also need to pay Activision $500 million (ÂŁ388m) for the rights to Call of Duty, bringing the total pay-out in the case of a botched deal to $5bn (ÂŁ3.8bn).

The Competition and Markets Authority (CMA) struck down the deal, saying Microsoft already holds a powerful position in cloud gaming, and the deal would “strengthen that advantage giving it the ability to undermine new and innovative competitors.”

Activision Blizzard owns some of the biggest IPs in gaming, such as World of Warcraft, Diablo and Candy Crush, all of which could become Microsoft-owned Xbox exclusives after the deal goes through, according to them.


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In a recent turn of events, Microsoft and Sony – the owner of Xbox’s largest console competitor: Playstation – reached a legally binding 10-year agreement to keep the popular Call of Duty franchise on the Playstation. Call of Duty is Activision’s most profitable game, boasting over 70 million daily active users. 

Now the CMA is giving itself until 29 August to resolve the antitrust conflicts with Microsoft, saying it is “ready to consider any proposals from Microsoft to restructure the transaction.” The CMA said that it “aims to discharge its duty as soon as possible and in advance of this date.”

“We are confident about our prospects for getting this deal across the finish line,” says Brad Smith, president of Microsoft.

Michael Edgar

Staff Writer, DIGIT

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