Microsoft may extend contract with Activision

Microsoft Corp is engaged in discussions for an extension of its acquisition contract with video game maker Activision Blizzard, which is due to expire on Tuesday. The purpose of the extension is to navigate the remaining regulatory challenges that could potentially impact their $69 billion deal, according to a person familiar with the matter.

The expiration of the contract does not automatically signify the collapse of the deal, as it grants either company the right to withdraw from the transaction. However, Microsoft, the creator of the Xbox gaming console, is eager to secure the contract extension to prevent Activision from being pursued by other potential acquirers or having a change of heart, as reported by the anonymous source.

Details regarding the terms and potential financial benefits for Activision under the negotiation of the extension remain undisclosed at present.

If an agreement is not reached by the end of Tuesday, the companies will continue negotiations for the extension. The source, who requested anonymity due to the confidential nature of the matter, revealed this information. Both Microsoft and Activision have not yet responded to requests for comment.

An extension would grant the companies additional time to address regulatory concerns, particularly in the United Kingdom, the only major jurisdiction posing an obstacle to finalizing the largest acquisition in the gaming sector.

Microsoft and Activision are actively engaged in negotiations with the Competition and Markets Authority (CMA) to explore potential remedies that would satisfy the antitrust concerns raised by the regulator.

The CMA has argued that Microsoft’s commitment to providing access to Activision’s lucrative “Call of Duty” franchise to rival cloud gaming platforms does not effectively preserve competition in the market. To facilitate further discussions with the companies, the CMA has extended its investigation period until August 29.

Last week, Microsoft signed an agreement to ensure the availability of “Call of Duty” on Sony Group Corp’s PlayStation console. Sony had been one of the deal’s most vocal critics, expressing concerns about potential constraints on consumer choice.

In a significant development, a U.S. appeals court recently rejected the U.S. Federal Trade Commission’s request to halt Microsoft’s acquisition of Activision, removing one of the final obstacles to the deal’s completion.

Activision’s shares closed at $93.2 on Monday, slightly below the $95-per-share deal price, indicating that most investors now perceive the deal’s completion as highly likely.