The deadline for Microsoft’s $69 billion takeover of video game company Activision Blizzard has been extended as the companies seek to complete a deal that has been challenged by US regulators and UK competition authorities.
Microsoft president Brad Smith said he believes pushing the deadline to Oct. 18 will give him enough time to work through the remaining regulatory issues.
“We are confident in our prospects for completing this contract,” Smith said.
The extension comes with higher termination fees if the contract is terminated, and many other new contracts.
Tuesday marked a crucial deadline for a deal announced 18 months ago. Both Microsoft and Activision have agreed that either party can pull out of the merger plan if the merger is not completed by then, which means that unless both parties decide to renegotiate, Microsoft will potentially may have to pay a split fee of US$3 billion.
The extension increased the termination fee to US$3.5 billion.
“Given global regulatory approvals and the confidence of both companies that the CMA recognizes that remedies exist to address concerns in the UK, the Boards of Activision Blizzard and Microsoft have informed both companies on October 18, 2018 that I have agreed not to terminate the contract until after this time.” A spokesperson for Activision Blizzard confirmed Wednesday. “We are confident in our next steps and believe the deal will be completed soon.”
Over the past week, Microsoft has worked to resolve long-standing legal challenges from US and UK antitrust law enforcement officials who said the merger would hurt competition.
The deal comes this week, especially after the Supreme Court ruled not to hear a last-ditch effort to block a takeover by gamers who claimed to be fans of Activision’s popular titles Call of Duty and World of Warcraft. It turned out to be effective in the United States. Overwatch and Diablo.
Judge Elena Kagan dismissed the emergency appeal without comment on Tuesday. Mr. Cagan handles emergencies from California and other Western states.
The UK, however, remained an obstacle, perhaps more likely to be overcome.
The Competitive Markets Authority initially rejected the deal, but later delayed a final decision to take into account Microsoft’s assertion that new developments would make the acquisition possible.
A judge on Monday conditionally approved a joint request from Microsoft and UK regulators to delay further legal proceedings, allowing the two sides to negotiate further.
Lawyer Daniel Beard, who is representing Microsoft in the UK lawsuit, told the judge on Monday, “We are grateful that the process is proceeding quickly as the UK is the only obstacle to closing and speed is paramount. I am doing,” he said.
Among the additional information the judge sought was Microsoft’s Sunday contract announcement to address concerns from top rival Sony, the maker of Microsoft’s Xbox rival the PlayStation console. Microsoft has announced a deal with Sony to keep Call of Duty on PlayStation for at least 10 years.
The U.S. Federal Trade Commission has not said whether it will continue to fight the takeover after both a federal judge and a federal appeals court denied attempts to block the deal from closing. The FTC may continue with the lawsuit filed against the agency’s in-house judge in August, which it purports to impede competition, but that doesn’t prevent the two companies from concluding a merger ahead of time.