By Aditya Soni
(Reuters) -Activision Blizzard and Microsoft on Wednesday extended the deadline for the close of their $69 billion deal by three months to Oct. 18 as the American companies work to secure UK approval for the biggest gaming deal in history.
U.S. regulatory efforts to block the takeover and Britain’s push to restructure it forced the companies to miss their original cutoff date of July 18.
The extension will “provide ample time to work through the final regulatory issues,” Microsoft President Brad Smith said in a tweet. “We are confident about our prospects for getting this deal across the finish line.”
The amended deal also increased the fee that the Windows maker owes Activision in case either side scraps the takeover – to $3.5 billion from $3 billion if it does not close by Aug. 29, and to $4.5 billion after Sept. 15.
Microsoft has been trying to extend the contract to make sure Activision is not wooed by another potential acquirer or has a change of heart, Reuters reported earlier this week.
The takeover, if successful, will boost Xbox maker Microsoft’s firepower with titles such as “Call of Duty” and “Diablo” in a videogame market where it competes with Tencent and Sony.
Strength in those titles helped Activision beat market estimates for second-quarter net bookings and adjusted profit in the second quarter, it announced on Wednesday.
“We expect to deliver strong financial performance for the full year, driven by the successful reinvigoration of the Diablo franchise,” CEO Bobby Kotick said.
Activision shares were slightly lower in early trading, while Microsoft was little changed.
The deadline extension came after the companies had to contend with varying concerns from regulators in the UK and the United States.
The FTC said the deal could let Microsoft degrade Activision’s game quality or player experience on rival consoles like Nintendo and Sony’s PlayStation, as well as manipulate pricing or change terms or timing of access to Activision content.
The CMA questioned whether the deal could hinder competition in the cloud gaming industry, where users can play on any device using subscriptions such as the Xbox Game Pass that offer a wide selection of games.
Microsoft responded to these concerns by offering 10-year licensing deals to rivals after the deal closes. The latest was an agreement with Sony Group to keep “Call of Duty” on PlayStation, the biggest competitor to Microsoft’s Xbox.
(Reporting by Chavi Mehta and Yuvraj Malik in Bengaluru; Editing by Devika Syamnath)
