In a bid to tackle regulatory complexities, Activision Blizzard Inc. (NASDAQ:ATVI) has agreed to provide Microsoft Corp. (NASDAQ:MSFT) three additional months to finalize the most significant transaction in video game history.
This $69 billion contract between the two corporate giants, originally established early last year, had an initial expiration date at the end of Tuesday in California. The extension now pushes the deadline to Oct. 18, as revealed in a regulatory filing on Wednesday.
In addition, Microsoft has agreed to elevate its payout to Activision from $3 billion to $3.5 billion post-Aug. 29 and to $4.5 billion post-Sept. 15, if either party aborts the deal. Both firms have expressed their commitment to not abandon the agreement and will persist in securing the final regulatory permissions needed for closure.
Once the deal is finalized, it will bring together Microsoft, the creator of the Xbox game console, with Activision, the publisher of popular games such as Call of Duty. This merger is anticipated to empower Microsoft within the $182 billion gaming sector, a prospect that has triggered regulatory concerns on both sides of the Atlantic. However, Microsoft maintains that the deal will be advantageous for consumers, as it will expand the distribution of games across numerous devices and platforms.
Microsoft’s head of gaming, Phil Spencer, expressed optimism about the completion of the deal via a tweet, emphasizing their intent to bring more games to players globally.
Despite the positivity, the UK Competition and Markets Authority (CMA), which blocked the deal in April, continues to pose a significant obstacle. The CMA had expressed apprehensions about the merger’s potential impact on the emerging cloud gaming market. However, the regulator has recently agreed to re-evaluate a restructured acquisition proposal, pending a new investigation into the revised deal. The duration of this new investigation remains uncertain.
As a possible solution to clear regulatory hurdles, both companies are contemplating relinquishing some control of their cloud gaming operations in the UK.
Meanwhile, despite efforts from the US Federal Trade Commission to prevent the merger, a California judge last week dismissed the motion to stall the deal. The FTC is presently appealing this decision.
Additionally, the updated merger agreement allows for Activision to issue a one-time dividend of up to 99 cents to its shareholders prior to the deal’s conclusion. Activision had previously suspended its regular dividend earlier this year.
In other news, Activision shared its Q2 results, highlighting a 50% year-on-year increase in net bookings to $2.46 billion, exceeding analyst expectations. Adjusted earnings per share were $1.08, surpassing the projected 88 cents.
Activision’s shares noted a less than 1% drop Wednesday morning in New York, while Microsoft shares remained stable.
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Author Kristen Moran 
