Microsoft and Activision Blizzard said Wednesday they were delaying a $69 billion merger as the two companies scrambled to get final approval from UK antitrust regulators.
The new extension, scheduled for Oct. 18, indicates the companies believe they will close the deal, but need more time to address regulators’ concerns.
When Microsoft announced its plans to acquire video game publisher Activision in early 2022, the two companies set a deadline of July 18 this year to close the deal. The revised agreement introduced a rising severance fee that Microsoft would have to pay to Activision if the purchase falls through, from $3 billion through August 29, then rising to a whopping $4.5 billion if not completed by September 15.
“We are confident in our prospects to close this deal,” said Brad Smith, Microsoft president, wrote on Twitter on Wednesday.
Activision CEO Bobby Kotick said in a statement, “While we remain concerned about the economy and growing competition in the industry, we remain focused on the long-term opportunity and completing our merger with Microsoft.”
The antitrust investigation has focused on whether consumers would be harmed if Microsoft, which makes the Xbox video game console and has an emerging game streaming platform, also owns the game publisher behind blockbusters like Call of Duty.
Three regulators ended up being the most crucial gatekeepers of the takeover. The deal was green-lit by the European Union in May after Microsoft agreed to offer Activision games on other streaming platforms. But it met with greater opposition in the United States and Britain.
In December, the Federal Trade Commission challenged the acquisition in the agency’s administrative court, arguing that Microsoft could keep Call of Duty from Sony’s popular PlayStation console. And in June, the FTC asked a federal judge to delay the deal while the administrative process continued. That judge ruled against the FTC last week, and an appeals court on Friday rejected the agency’s request to stop the deal.
The UK’s competition authority, the Competition and Markets Authority, decided in April to block the deal because it could harm consumers who stream online games. Microsoft and Activision appealed the finding.
Last week, shortly after a federal judge rejected the FTC’s attempt to block the deal, Microsoft, Activision and the U.K. antitrust regulator said they wanted to pause the appeals process to see if they could negotiate a settlement that addresses concerns about the regulations removed. On Monday, the regulator told the tribunal hearing the appeal that there was a “realistic chance” that the talks would be successful. The court granted a two-month stay on appeal.
On Sunday, Microsoft also said it had reached a deal with Sony to keep Call of Duty on PlayStation for 10 years, allaying the FTC’s biggest concern in court. Typically, the FTC drops its administrative case if it loses in federal court, but it has not yet withdrawn its objections to Microsoft’s takeover plans.
Adam Satariano reporting contributed.