Microsoft (MSFT) -) and Activision Blizzard (ATVI) -) agreed to extend their planned merger by another three months, the companies said Wednesday, following a series of regulatory decisions that could see the completion of the long-delayed $69 billion deal.
The companies said the agreement, first unveiled in January of last year, would be extended until October 18 -- from its original closing date of July 18 -- as the pair work to final approval from the U.K. Competition and Markets Authority (CMA), which said earlier this week it will take a second look at the merger after receiving what it called a "detailed and complex" proposal from Microsoft.
The CMA had blocked the deal in late April, saying a Microsoft takeover of Activision would "alter the future of the fast-growing cloud gaming market" and stunt innovation and limit choice for gamers over the coming years. The watchdog added that Microsoft's proposed remedies would require enhanced overnight.
Microsoft also agreed to pay an enhanced $4.5 billion termination fee if the deal is terminated after September 15, up from the original breakup fee of $3 billion first agreed last year.
“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. 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," an Activision spokesperson told TheStreet in an emailed statement.
"We’re confident in our next steps and that our deal will quickly close,” the statement added.
Microsoft shares were marked 0.26% higher in pre-market trading following news of the extension to indicate an opening bell price of $360.30 each. Activision Blizzard shares down 0.14% to $92.61 each.
The agreement delay also follows series of court victories for Microsoft against the U.S. Federal Trade Commission in its takeover pursuit of the 'Call of Duty' video game maker. It will keep the popular game on PlayStation for at least 10 years and potentially address any residual concerns from competition authorities in markets elsewhere.
Microsoft won approval from the European Commission, the region's executive, for the Activision takeover in May when competition chief Margrethe Vestager said the tech giant's plans to allow games such as "Call of Duty" to remain on rival platforms were "pro competitive".
The all-cash offer, which values Activision at $95 a share, gives Microsoft access to 30 internal game development studios, as well as e-sports publishing capabilities, while helping build out its XBox console offerings. The deal is set to close later this year.
Activision CEO Bobby Kotick said the decision would pave the way for his company's takeover by Microsoft, adding that the deal would "benefit consumers and workers."
"It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry," Kotick said.
