Microsoft and Activision Blizzard could merge as early as next week

This week, a US court officially made its decision on Microsoft's proposed acquisition of Activision Blizzard, denying the FTC's request to block the merger. This leaves the UK's CMA as the final hurdle against the deal closing and within an hour of the US court decision going public, Microsoft and the CMA announced a plan to pause their appeal battle to renegotiate. At the rate things are going, Microsoft could officially own Activision Blizzard as soon as next week. 

After 18 months of back-and-forth debate over the merits of the transaction, we are finally at the finish line. The FTC has lost its request for an injunction to stop the merger, allowing Microsoft to legally complete the transaction in the US. Previously, Microsoft executives have alluded to potentially closing despite the CMA's decision to block the deal in the UK. Such a situation could involve restrictions on Microsoft's xCloud offerings in the UK, or perhaps seeking a new publishing partner to bring Activision games to the UK market.

According to CNBC's David Faber, Microsoft and the CMA may have already come to an agreement involving a “small divestiture” to address the regulator's concerns. Given that the CMA's decision primarily focused on the deal's impact on the cloud gaming market, it has been theorised that this divestiture could involve pulling xCloud from the UK, or perhaps just agreeing not to offer Activision Blizzard titles like Call of Duty over xCloud.

If Microsoft does pull its cloud-streaming tech out of the UK, the company could still position itself as a supplier of games to rival cloud gaming services. This would mean that while Microsoft doesn't offer the ability to stream games directly, users would be able to use services like Nvidia's GeForce Now to access those games instead.

As reported by Reuters, the CMA has stated that “while merging parties don't have the opportunity to put forward new remedies once a final report has issued, they can choose to restructure a deal”. However, doing so “can lead to a new merger investigation”. Given that there has already been an extensive investigation into the deal, it is unclear how long a second ‘investigation' based on new proposals would take.

The contract between Microsoft and Activision Blizzard stipulates a July 18th deadline for the deal to close. After that date, Microsoft will be obligated to fork out $3 billion to break the contract. Microsoft will be moving fast this week to get everything in order to ensure the transaction can go through next week. Activision has made it clear that it does not want to extend the current deal any further than the current deadline.

While the deal can theoretically close by July 18th, the FTC can seek to split the companies up after the merger. The process will be much more difficult and given the FTC's weak case in the injunction hearing, it is unclear if they would seek another trial. With that said, the FTC is reportedly “leaning towards” appealing the injunction decision, according to Bloomberg.

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KitGuru Says: We're in the final stretch of this Microsoft-Activision saga. This time next week, we should finally be able to put this story to rest and start focusing on what happens next. 

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