Xbox and Activision Blizzard: Acquisition Delayed, What Happens Now?

Xbox and Activision Blizzard have made the decision to delay finalizing the giant acquisition until October 18th. An option, it stems from the disapproval of the CMA, the UK’s antitrust authority which was the first to raise suspicion on the grounds of monopoly potential in the emerging cloud gaming sector. After the CMA’s negative opinion, Microsoft decided to file an appeal with the CAT – the Competition Appeals Tribunal – to try to overturn the decision, until the parts on the board suddenly changed hands. The rejection of a preliminary injunction from the US FTC, along with the agreement with Sony to bring the massive Call of Duty series to the competing PlayStation platform, has convinced the parties to ask CAT to put the appeal on hold, in order to take time to negotiate the cloud gaming issue.

Initially, Microsoft and Activision Blizzard agreed to finalize the acquisition by July 18th: if things weren’t done by that date, the parties could have renegotiated a new deadline, and in the absence of an agreement, Microsoft would have had to pay $3 billion. fine dollars. July 18th has finally arrived and a decision has been made: As reported by Microsoft Vice President Bradley Smith and Activision Blizzard COO Lulu Cheng Meservey, the companies have decided to extend the deadline by three months, to October 18th, 2023, to provide: “A very large window of time, capable of allowing the latest organizational problems to be resolvedThis is a solution that won’t be entirely easy for Microsoft, since the postponement has unavoidable consequences. Let’s analyze the situation in detail, and try to understand What will happen from here until next October 18thA new deadline has been set for closing Microsoft’s acquisition of Activision Blizzard.

Microsoft-ABK acquisition in a nutshell

On January 18, 2022, Microsoft announced plans to Get all from Activision Blizzard – one of the largest video game publishers in the world, with annual revenues of more than $8 billion – offering $68.7 billion, or $95 per share. The acquisition idea was born out of the Redmond Company’s desire to challenge other giants operating in the gaming sector such as Tencent, NetEase, Google and Apple Inc, which led to the merger of the experience of Al Ahli Bank of Kuwait at a price that was determined as advantageous by the company’s CEO, Robert Kotek. Because the company has never been navigating good waters. Activision Blizzard shareholders approved the deal almost unanimously and the closing date has been set for July 18, 2023, with the aim of responding to any concerns that may arise in the world’s major antitrust authorities.

The acquisition has been approved by most authorities – including the European Commission that has accepted the remedies proposed by Microsoft – with the important exceptions of Federal Trade Commission The United States, which intercepted on December 8, 2022, and Competitions and Market Authority English, which ruled definitively on April 26, 2023. The FTC launched an in-depth investigation that ended with a request for a restraining order and a subsequent preliminary injunction intended to prevent the takeover: On July 11, 2023, Judge Corley denied the injunction and terminated the restraining order, effectively granting the green light effective for the operation. For its part, the CMA focused heavily on the issue of cloud gaming and decided to block the acquisition, prompting Microsoft to appeal to the CAT; Following the latest developments, in just the past few hours, the parties have requested and obtained a hold of the appeals process to discuss a possible solution. It is worth noting that, as such, Microsoft could have moved forward with the acquisition within the stipulated deadlines, but instead chose a further delay.

What does deferment mean?

Microsoft delay It does not represent a painless reality: the penalty in the event of a non-acquisition will first increase by $3.5 billion, $500 million more than the original agreement, if the transaction is not closed by August 29; Moreover, if time continues to expand to September 15th, that amount will reach $4.5 billion. In any case, Activision Blizzard said it was prepared to:Separate the company or some of its assets, or perform various actions, in order to absorb the transaction“Before the UK bodies. The crux of the matter remains in fact the position of the CMP, which has recently communicated the date on which it intends to issue its new final decision, i.e. 29 August 2023; which is the date Microsoft will assume what After him she remains free to reopen the appeal to the CAT.

The increase in penalties is a measure that Activision Blizzard has requested also and above all because of the exceptional performance of the company – perhaps supported by the success of Diablo IV — who was the protagonist of a memo CEO Bobby Kotick sent to shareholders on July 19, 2023. In communication — that We advise you to read in full We are talking about:Annual increase in sales by 50% and operating income by 80%Also, just to add some spice, Kotick also mentioned that: “We continue to set new standards of excellence in workplace cultureBack upstream, even if the extension has a total duration of three months, it is clear that the parties are aiming for Decide early Compared to the times, perhaps precisely on August 29, 2023, the date of the CMA announcement. Also because from now until October, The US Federal Trade Commission may return with a new case.

The never ending story

Phil Spencer Send an email to all Microsoft employees that states: “Microsoft and Activision Blizzard are confident that the acquisition will happen, so we have made the decision to delay the transaction until October 18, 2023. While we may technically close already following recent legal developments, this extension allows us to resolve any remaining UK regulatory concerns.Next, thank the staff for.The time and effort that went into supporting actions, as well as the great work that will pay off on the Xbox platform this yearbefore giving Al Ahli Bank of Kuwait some regards toGreat job done for the successful launch of Diablo IV and the performance of Call of Duty: Modern Warfare II“.

“As we draw closer to the conclusion, we’re happier than ever to continue our mission to bring more games to more gamers everywhere.In short, these are the words of a seemingly convinced leader who is one step away from the goal that has been in his imagination for years. Indeed, if the acquisition were to finally take place, the Xbox division would get a massive injection of quality and quantity on the asset front – which we summed up In a dedicated article – able to finally make it competitive in this segment on an equal footing with such giants as Sony, Tencent and NetEase, betting everything on – the on-demand service included in the Game Pass offer.

What then The following useful dates for the acquisition? August 29, 2023 marks the deadline chosen by the Capital Markets Authority to decide on the matter; In the event of a positive match, Microsoft can move forward with the process without incurring an increase in penalty, postponing concern about a potential lawsuit by the FTC into the future. In the event of a negative response from the CMA, the appeal path to the CAT will remain open, but you should pay attention to September 15, 2023, the date on which the second increase in the sentence will enter into force. Finally, the new deadline for ending the process is October 18, 2023, the day that in the absence of a deal will mark the end of this never-ending saga, one way or another.

There is no doubt that Microsoft’s acquisition of Activision Blizzard One of the most important events in the history of the video game market; Whatever the outcome, it will determine the future of the medium so irreparably, that it has long since come to change not only the strategies of the parties involved, but also those of third-party giants like Sony, a house that has hitherto never stopped fixating its gaze on the chessboard. , and stepping in whenever allowed by Jim Ryan’s hulking figure. Will Phil Spencer be able to implement his strategy? After more than a year of discussions, the final answer will come in the next three months.