Later today, the UK’s Competition and Markets Authority (CMA) is set to deliver its ruling on Microsoft’s proposed $69bn acquisition of Activision Blizzard.
While this could give a strong indication of whether the merger is approved globally, the US Federal Trade Commission (FTC) still has a hearing on its complaint to block the merger filed in December. It’s scheduled for August 2, after Microsoft’s July 18 merger deadline expired.
Microsoft plans to swiftly end the FTC’s concerns about the deal, the New York Post reports.
Microsoft has made some concessions in order to get approval from both the CMA and the European Commission, which will make its decision on May 22. Indeed, the CMA provisionally stated that the acquisition “will not substantially reduce competition in relation to console gaming in the UK”, although concerns about cloud gaming remain.
With the approval of both, the FTC will come on the backfoot.
A source told the New York Post that should Microsoft receive approval in Europe, it plans to close the merger at $95 a share.
Earlier this week, Activision was trading at $85.63. It is expected to rise to around $95 if the merger is approved, or drop to $75 if Microsoft abandons the deal, one trader said.
However, the FTC may still file for a temporary injunction from a US federal court to prevent the merger from closing, though it may fail based on today’s outcome.
“The law requires the FTC to raise only serious, questionable questions about a merger to get an injunction,” a DC antitrust source told the New York Post. “But as a practical matter the judge is assessing the merits of the case.
“If Microsoft makes a deal with the Brits and EU it can say antitrust concerns have been resolved, and that’s not a useful fact to the FTC if you’re a judge.”
According to sources, should Microsoft miss its July 18 merger deadline, it will have to pay Activision a $3bn termination fee. FTC internal hearings typically take more than a year to conclude.
“The FTC was trying to finish the deal with the process,” a source told the New York Post, explaining that the delay helped the regulator.
After today, the FTC will likely either negotiate a deal with Microsoft similar to the UK and EU deals, or continue to pursue the case in its internal court to block the merger — though that may take more than a year. It may take time.
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