Microsoft and Activision Blizzard have extended the deadline of their proposed merger until 18th October this year.
The self-imposed deadline was originally 18th July (yesterday), after which Microsoft would owe Activision Blizzard a $3bn fine.
“Together with @Activision, we are announcing the extension of our merger agreement to 10/18 to provide ample time to work through the final regulatory issues,” Brad Smith, Microsoft’s vice chair and president, said in a Twitter post on Wednesday.
If the companies fail to close by Aug. 29, Microsoft could be asked to pay a breakup fee of $3.5 billion, an increase of $500 million over the previously agreed-upon sum, according to a filing from Activision with the Securities and Exchange Commission. If the deal fails to close by Sept. 15, the breakup fee could increase to $4.5 billion, the filing said.
In addition, according to the filing, if the companies fail to complete their merger and Microsoft is forced to pay the breakup fee, the companies also agreed that beginning on Oct. 18 Microsoft would have to pay Activision “100% of all proceeds or other payments for games” that belong to Activision.
Following a federal judge’s decision last week in the US not to block the acquisition from closing, Microsoft announced a deal with the UK’s Competition and Markets Authority (CMA) to suspend litigation over the merger. The move is intended to give both sides time to reach agreement on how the acquisition might be altered to address competition concerns in that country.
“The recent decision in the U.S. and approvals in 40 countries all validate that the deal is good for competition, players, and the future of gaming,” a company spokesperson said.
“Given global regulatory approvals and the companies’ confidence that CMA now recognizes there are remedies available to meet their concerns in the UK, the Activision Blizzard and Microsoft boards of directors have authorized the companies not to terminate the deal until after October 18. We’re confident in our next steps and that our deal will quickly close.”
In a memo to employees, Activision CEO Bobby Kotick thanked staff for their patience.
“I know many of you have questions about our merger with Microsoft,” Kotick wrote. “I am happy to share that based on our continued confidence in closing our deal, the Activision Blizzard and Microsoft boards have mutually agreed not to terminate the deal until after October 18.”
“This merger is great for players, workers, and our business, and it will create opportunities to compete against companies with large talent pools, strong IP and complete control of their markets. Our merger is cleared to close in over 40 countries already, and we remain confident in resolving any remaining regulatory concerns in the UK.”