Microsoft, Activision agree to extend deal deadline to Oct. 18

Microsoft and Activision Blizzard agreed on Wednesday to extend the deadline for their merger deal to October 18, according to a statement from Activision.

The two corporations had agreed to finalize the merger by July 18, but regulatory opposition from the United States and the United Kingdom delayed the takeover.

If Microsoft had not extended the contract deadline, it may have faced a $3 billion breakup fee from Activision Blizzard. By extending the deadline for the businesses to close on their transaction, Microsoft and Activision are allowing themselves more time to address regulators' concerns and complete the transaction.

A new agreement reached on July 18 between Microsoft and Activision contained a provision to increase the termination fee by increments at specified points if the merger is not completed by the new date.

If the transaction is discontinued by the parties, the breakup fee will be increased to $3.5 billion by August 29, and to $4.5 billion by September 15.

The UK regulator is prepared to bargain.

The prolongation came as the UK Competition and Markets Authority asked to postpone its evaluation of the transaction until August 29. Microsoft and Activision are now allowing ample time for the CMA appraisal to be completed.

The CMA initially vetoed the purchase in May, citing competition concerns in the burgeoning cloud gaming market. After the Federal Trade Commission's attempt to prevent the sale failed in court, the UK authority shifted course and halted all litigation.

The CMA stated that it was "ready to consider any proposals from Microsoft to restructure the transaction" to address the regulator's concerns.

Based on its previous work, the regulator will now need to initiate a new investigation into the transaction. While this could normally take several months, the watchdog is attempting to speed up the process in order to meet its own August 29 deadline.

The CMA will permit Microsoft to present a reformed agreement. When the EU approved the merger, it was contingent on Microsoft making several concessions, including royalty-free licenses to cloud gaming platforms to stream Activision games.

Microsoft made similar concessions to the CMA, but the remedies were rejected because the agency felt they would be difficult to execute and would not address concerns about power concentration in the cloud gaming industry. Microsoft will have to create a new suite of software. actions beyond its earlier pledge to assuage the CMA's concerns.