Microsoft (MSFT) is on the brink of surmounting its last obstacle in the United Kingdom, as it strives to secure its acquisition of the renowned game developer, Activision Blizzard (ATVI), in a deal valued at a staggering $69 billion. This deal, mired in regulatory scrutiny for the better part of this year, has been characterized by a series of hurdles, but a recent announcement by the UK regulator, Competition and Markets Authority (CMA), signifies a significant breakthrough.
On Friday, the CMA revealed that it had concluded the initial phase of assessing a revised proposal put forth by Microsoft. This proposal, devised to win the favor of CMA regulators, involves the transfer of Activision’s cloud gaming rights to the French gaming powerhouse, Ubisoft (UBI.PA). This strategic move was prompted by CMA’s prior reservations, which led to the initial blocking of the acquisition due to concerns that it might stifle competition within the cloud gaming arena.
The CMA had set a crucial deadline of October 18 for the review of this novel proposal, coinciding with the extended merger deadline set by Microsoft and Activision Blizzard. The two companies had initially entered into their agreement in January 2022. The latest statement issued by the CMA on Tuesday stated that Microsoft’s concession “substantially addresses previous concerns and opens the door to the deal being cleared.” An official from the CMA underscored the significance of this development, stating, “This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft.”
Nevertheless, the CMA acknowledged the existence of “limited residual concerns” within the proposal, citing the potential for certain provisions to be circumvented, terminated, or not enforced. The agency expressed confidence that Microsoft’s proposed remedies would effectively mitigate these concerns. Presently, the CMA is in the process of soliciting feedback on the proposed remedies before rendering a final decision.
Brad Smith, Microsoft’s Vice Chair and President, expressed optimism regarding the CMA’s positive stance, stating, “We are encouraged by this positive development in the CMA’s review process. We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline.”
Microsoft had also encountered regulatory scrutiny in the United States, although in July, the Federal Trade Commission (FTC) withdrew its challenge against the acquisition. This left the CMA as the sole remaining regulatory hurdle impeding the deal’s progress. Bobby Kotick, CEO of Activision Blizzard, applauded the CMA’s forward-moving decision, asserting, “This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators. I remain optimistic as we continue the journey toward completion and am very grateful to each of you for your dedication and focus throughout this process.”
The FTC’s decision to withdraw its challenge was based on a federal appeals court ruling that denied its request for a temporary halt to the deal’s closure. With this latest development, Microsoft inches closer to the finish line in its pursuit of acquiring Activision Blizzard. Both companies are resolutely hopeful that they can successfully conclude the deal before the impending October 18 deadline.
Source: Yahoo Finance
