Microsoft-Activision Deal Poised to Close Later Than Planned

Leah Nylen and Dina Bass, Bloomberg News

Pedestrians pass in front of the Microsoft Corp. flagship store in New York, U.S., on Saturday, July 14, 2018. Microsoft Corp. is scheduled to release earnings figures on July 19. Photographer: Mark Kauzlarich/Bloomberg , Bloomberg

(Bloomberg) -- Microsoft Corp. and Activision Blizzard Inc. are nearing the finish line on their $69 billion deal, but aren’t likely to close it by a Tuesday deadline, people familiar with the deal said.

The companies don’t plan to walk away from the deal and will continue seeking the final regulatory approvals needed for closing, said the people, who declined to be named because they were not authorized to speak publicly on the matter.

Microsoft and Activision declined to comment.

Regulatory momentum has shifted in favor of the deal in recent days, with the US Federal Trade Commission failing to block it in court and the UK’s Competition and Markets Authority announcing an unprecedented move to start fresh talks on ways to assuage UK government concerns. Still, the progress likely isn’t fast enough to complete the deal by Tuesday’s milestone.

The potentially missed deadline underscores the sway held by regulators in the UK, one of the biggest markets for Microsoft and Activision games and consoles. The CMA is concerned the deal would reduce competition and innovation and give gamers fewer options. Microsoft, which embarked on the deal 19 months ago to become a stronger gaming company with a foothold in mobile games, has had to make compromises, agreeing to give rivals Sony Group Corp. and Nintendo Co. access to Activision’s Call of Duty games.

The merger agreement set July 18 as the date at which both companies could walk away, with Microsoft bound to pay Activision $3 billion if the acquisition is terminated. The companies could proceed under the current deal, which would allow Activision to walk away at any time. They could also seek to amend the agreement, though doing so would open the possibility of changes to financial terms.

UK regulators vetoed the deal in April amid concerns about its impact on the cloud gaming market. A May 5 order bars the companies from closing the purchase even though it has now received government approvals in 39 countries. The CMA has so far maintained its veto while negotiations continue.

Microsoft Clears Another Hurdle as Court Halts UK Veto Case

A violation of the UK order would lead to fines up to 5% of the companies’ combined global revenue. British enforcers could opt to change their order to allow Microsoft and Activision to close outside the UK while keeping the companies separate inside the country.

The UK discussions are expected to take several days or weeks to resolve, and the CMA has officially extended its target date on the probe to Aug. 29, although officials have said they aim to conclude earlier.

In another positive step for the deal, a British antitrust tribunal judge provisionally agreed on Monday to pause an appeal case targeting the CMA’s initial veto, lifting another obstacle toward a new UK decision. He said the court had been “gifted” with new circumstances that showed “the game has moved on.”

--With assistance from Katharine Gemmell, Peter Chapman and Jonathan Browning.

(Updates with additional details of changes to UK process in last two paragraphs)