{"id":12891,"date":"2023-07-19T17:08:05","date_gmt":"2023-07-19T14:08:05","guid":{"rendered":"https:\/\/www.robomarkets.com\/blog\/?p=12891"},"modified":"2023-07-19T17:20:12","modified_gmt":"2023-07-19T14:20:12","slug":"microsoft-and-activision-blizzard-deal-chances-of-success-and-stock-prospects","status":"publish","type":"post","link":"https:\/\/www.robomarkets.com.cy\/blog\/stock-market\/analysis\/microsoft-and-activision-blizzard-deal-chances-of-success-and-stock-prospects\/","title":{"rendered":"Microsoft and Activision Blizzard Deal: Chances of Success and Stock Prospects"},"content":{"rendered":"\n

Activision Blizzard Inc.<\/a> (NASDAQ: ATVI) stock gained over 10% on 11 July 2023 following the news of the federal court of San Francisco lifting the ban imposed by the US Federal Trade Commission (FTC) on the deal between Microsoft Corporation<\/a> (NASDAQ: MSFT) and the gaming company. At the time of writing, the only remaining obstacle to the completion of the acquisition is the ban from the UK Competition and Markets Authority (CMA).<\/p>\n\n\n\n

Today we will examine the deal between these corporations and its complexities. We will explain the risks the IT giant faces in case the purchase of the game developer fails and explain how these developments are affecting the value of the stocks<\/a> of both companies.<\/p>\n\n\n\n

<\/span><\/a>When was the deal between Microsoft and Activision Blizzard announced?<\/span><\/h2>\n\n\n\n

Microsoft Corporation announced its intention to acquire one of the world’s largest video game publishers and developers on 18 January 2022. In the official press release, it was stated that the management of Activision Blizzard Inc. agreed to the terms of the deal, which amounted to 52 billion GBP, exceeding the company’s market capitalisation at the time by 45%.
Following the acquisition, Activision Blizzard Inc. would become a subsidiary of Microsoft Corporation, led by the head of Xbox, Phil Spencer. The technology corporation has committed to preserving the creative independence and culture of the gaming company, as well as supporting all its brands and franchises, including Call of Duty, Overwatch, World of Warcraft, and Candy Crush.<\/p>\n\n\n\n

<\/span><\/a>What challenges have Microsoft and Activision Blizzard faced?<\/span><\/h2>\n\n\n\n

The deal between Microsoft Corporation and Activision Blizzard Inc. could significantly alter the landscape and the balance of power in the video game and cloud services market, as well as affect the fate of many popular franchises. Therefore, the companies must obtain approval from antitrust authorities to complete the acquisition.<\/p>\n\n\n\n

By June 2023, the purchase had been approved by the respective regulators in 37 countries, including the European Union and China. However, the US Federal Trade Commission (FTC) and the UK Competition and Markets Authority (CMA) expressed opposing views.<\/p>\n\n\n\n

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<\/span><\/a>FTC opposition to the takeover of Activision Blizzard<\/span><\/h3>\n\n\n\n

In December 2022, the FTC went to court to block Microsoft Corporation’s deal with Activision Blizzard Inc. The Commission stated that this acquisition would harm consumers as the IT corporation would gain exclusive access to the products of the gaming company and potentially eliminate competition from Sony Group Corporation (NYSE: SONY), Alphabet Inc.<\/a> (NASDAQ: GOOG), and other competitors in the cloud gaming market, thereby establishing a monopoly. In addition, according to FTC officials, Microsoft Corporation did not provide sufficient information about the deal and its market implications.<\/p>\n\n\n\n

On 11 July 2023, the federal court in San Francisco ruled in favour of the technology giant. Two days later, the regulator appealed to overturn this decision and extend the review period for the acquisition, but the request was denied.<\/p>\n\n\n\n

<\/span><\/a>CMA opposition to the Microsoft-Activision deal<\/span><\/h3>\n\n\n\n

The UK regulator blocked the deal in April 2023 over concerns that the acquisition would strengthen Microsoft Corporation’s advantage over competitors in cloud gaming and threaten to create conditions for the development of a monopoly.<\/p>\n\n\n\n

However, after the US court refused to block the acquisition, CMA officials said they were ready to consider any proposals from Microsoft Corporation to restructure the deal. Furthermore, the CMA is ready to abandon litigation – it is only necessary to reach a compromise. However, the parties failed to reach an agreement, and on 14 July, the regulator extended the deadline for its review of the case to 29 August.<\/p>\n\n\n\n

<\/span><\/a>What risks does Microsoft face if the deal is not completed?<\/span><\/h2>\n\n\n\n

Microsoft Corporation and Activision Blizzard Inc. signed an agreement on 18 January 2023 that specified the deadlines for closing the deal. If the tech corporation fails to complete the acquisition on time for any reason, it is obligated to pay financial compensation to the other party. There were three specified dates:<\/p>\n\n\n\n