Microsoft and Activision Engage in Talks for Contract Extension

Microsoft Corp and video game maker Activision Blizzard are engaged in discussions regarding an extension of their acquisition contract, which is set to expire soon. The purpose of this extension is to overcome remaining regulatory obstacles to their $69 billion deal, according to an anonymous source familiar with the matter.

While the contract’s expiration would not automatically result in the deal collapsing, it provides either company with the option to walk away from the transaction. Microsoft, the company behind the Xbox gaming console, is eager to secure the extension to prevent Activision from being courted by other potential acquirers or experiencing a change of heart.

The specific terms of the extension and whether it would offer more favorable financial conditions for Activision remain undisclosed at the moment. Negotiations will continue beyond Tuesday if no agreement is reached by then, as stated by the anonymous source who wishes to keep the matter confidential. Both Microsoft and Activision have not yet responded to requests for comments on the matter.

An extension would provide the companies with additional time to address regulatory concerns in Britain, which is the only major jurisdiction posing an obstacle to completing the deal. To appease the Competition and Markets Authority (CMA) and its antitrust concerns, Microsoft and Activision are engaged in talks over potential remedies.

The CMA has raised issues with Microsoft’s commitment to granting access to Activision’s lucrative “Call of Duty” franchise to rival cloud gaming platforms, citing potential competition concerns. The CMA has agreed to extend its investigation until August 29 to allow for further negotiations with the companies. Recently, Microsoft signed an agreement with Sony Group Corp to ensure that “Call of Duty” remains on Sony’s PlayStation console. Sony, previously a vocal critic of the deal, was concerned about potential implications for consumer choice.

On Friday, a U.S. appeals court dismissed the U.S. Federal Trade Commission’s request to halt Microsoft’s acquisition of Activision, eliminating one of the final hurdles to the deal’s completion. As of Monday, Activision’s shares closed at $93.2, slightly below the $95-per-share deal price, suggesting that most investors now view the deal’s completion as likely.