Highlights
The trial between Microsoft and the FTC regarding the Activision Blizzard acquisition is expected to be put on hold as the FTC seeks to engage in settlement discussions, in response to pressure from lawmakers.The FTC's loss in federal court is viewed as a significant setback to its attempts to prevent the deal from going through, potentially enabling Microsoft to move forward without obtaining explicit approval.
The FTC is expected to put its in-house trial with Microsoft on hold, as they are inclined to engage in settlement discussions. This decision aligns with mounting pressure from lawmakers urging the FTC to cease their opposition to Microsoft's acquisition of Activision Blizzard.
After a week-long hearing in late June, the Ninth Circuit Court of Appeals rejected the FTC's effort to block Microsoft's acquisition of Activision Blizzard on July 14. This defeat in federal court was widely seen as a significant setback for the FTC, diminishing their chances of preventing the deal.
According to Bloomberg, the FTC has currently halted an administrative challenge to the acquisition, which was scheduled for an in-house trial in August. This development opens up the possibility for settlement discussions between Microsoft and the FTC. However, the agency is still appealing the federal court's ruling, although Microsoft may proceed with the acquisition without explicit approval from the FTC since their request for a preliminary injunction was denied. In light of this, the FTC's decision to pause the administrative case against the $68.7 billion acquisition could indicate that they are now willing to negotiate concessions with Microsoft instead of outright opposing the deal.
If settlement negotiations are indeed imminent, the talks are likely to proceed quickly. This is partly due to the fact that Microsoft has already surpassed its initial deadline of July 18 for finalizing the acquisition. As a response, Microsoft and Activision Blizzard recently agreed to extend the acquisition deadline for an additional three months.
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The Call of Duty maker was able to increase the previously agreed $3 billion termination fee by an additional $500 million in exchange for ongoing cooperation. If the deal is terminated after September 15, Microsoft will have to pay Activision Blizzard a breakup fee of $4.5 billion. To put this in context, this amount exceeds Activision Blizzard's most profitable year on record in 2021, when the company reported a profit of $3.16 billion.
In addition to facing opposition from the FTC, the acquisition is currently being challenged by the British Competition and Markets Authority. Microsoft has already appealed the UK's rejection of the Activision Blizzard deal, and a final decision is expected by the end of summer.
Source: Bloomberg
