Microsoft and Activision extend the deadline for their $68.7 billion merger to October 18th

After 18 months of battling their way through regulatory red tape, Microsoft and Activision Blizzard are closer than ever to making their merger happen. However, with some issues still to smooth out in the UK, the companies weren't able to neatly tie things up in time for their initial July 18th deadline. As such, they've agreed to extend their merger agreement by three months to get the $68.7 billion acquisition over the line.

"Microsoft and Activision Blizzard have jointly agreed to extend the merger agreement deadline from July 18th, 2023 to October 18th, 2023, to allow for additional time to resolve remaining regulatory concerns," Microsoft said in a statement. 

If they hadn't agreed on new terms and either side walked away (which they could have done as of today), Microsoft would have been on the hook for a $3 billion breakup fee. That termination fee will increase to $3.5 billion if the merger hasn't closed by August 29th and $4.5 billion if it's not a done deal by September 15th. The fee will only be paid if the acquisition doesn't close. In addition, they agreed that Activision can give its shareholders a dividend of $0.99 per share.

"Microsoft and Activision Blizzard remain optimistic that we will get our acquisition over the finish line, so we have jointly agreed to extend the merger agreement to October 18th, 2023," Microsoft Gaming CEO Phil Spencer wrote in a note to employees. "While we can technically close in the United States due to recent legal developments, this extension gives us additional time to resolve the remaining regulatory concerns in the UK."

The Competition and Markets Authority, the UK's antitrust regulator, initially blocked the deal in April based on concerns over its impact on the cloud gaming market (deals Microsoft signed with third-party cloud gaming platforms were enough of a remedy for the European Union to approve the merger). Microsoft appealed the CMA's decision but with just days to go before the deadline, the CMA said it would be willing to review a modified merger proposal.

The CMA, Microsoft and Activision submitted a joint proposal to an appeals tribunal to delay their litigation by two months in an attempt to resolve the regulator's concerns amicably. The appeals tribunal granted that request on Monday. The CMA has also given itself an extra six weeks, until the end of August, to review Microsoft's new proposal. However, it hopes to do so as quickly as possible.

It's not quite clear when this might all be wrapped up one way or the other, but the CMA and both companies are aiming to do so very soon and certainly well before October 18th. One key date to look out for is August 2nd. That's when an evidentiary hearing in the Federal Trade Commission's administrative proceeding in an attempt to block the deal is scheduled to start. The FTC was unsuccessful in its efforts to obtain an injunction to stop the merger from happening in the meantime. However, if the deal hasn't closed by August 2nd and the FTC's administrative trial begins, things could get more complicated for Microsoft and Activision.