Microsoft’s attempts to acquire Activision Blizzard was one of the biggest stories of 2022, and one that continues to evolve. The year closed with the news that the FTC had sued to block the deal from closing, and now Techspot are reporting that the lawsuit will scupper the deal, at least for now.
The deal is currently due to be completed by July 18th, whereas the FTC’s case will not be heard until August 2, over two weeks later. This effectively forces a breach of agreement, as the companies will be unable to complete the deal until the case is closed.
As a result of this, a new deal would need to be drawn up, which could include new terms for the acquisition. A failure to close the deal could also result in Microsoft being required to pay a $3 billion “breakup fee” to Activision Blizzard, however it’s likely this fee could be waived as the failure to close the deal is outside of Microsoft’s concern.
Moreover, both Activision Blizzard and Microsoft are keen for the deal to be completed, and this could be put into jeopardy should Activision Blizzard insist on receiving this fee. As such, a renegotiation could be more likely.
What would a new deal look like?
At the time of the original agreement, Microsoft was due to pay $95 per share, representing a 40 percent premium on Activision Blizzard’s $65 market price at the time. Since this time Activision’s stock has risen, peaking at $82.31 on the day of the announcement, and trades at $76.67 per share at the time of writing. As such, Activision Blizzard is arguably in a better position to bargain, and as such could request a similar premium, raising the price to around $112 per share should the stock price remain consistent.
Should the deal be halted, albeit temporarily, Microsoft could be wise to consider the concerns of competitors and regulatory bodies. This could include a formal guarantee to maintain the Call of Duty franchise’s availability across consoles. Microsoft only recently agreed to sign a consent decree agreeing to release the franchise on the PlayStation, following a lengthy period of refusing to do so despite stating their intent. Agreeing to sign such a contract at the outset of a new negotiation could go a long way towards easing concerns.
We listed Activision Blizzard as one of the top 50 mobile game makers of 2022.
