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Microsoft fails to offer Activision Blizzard remedies amid EU regulator probe of MSFT’s ATVI takeover

By Jenny McCall

11:08, 2 November 2022

A image of the Microsoft and Activision Blizzard logo.
MSFT hopes the acquisition of ATVI will help increase better competition in the market among some of its heavyweights like Sony - Photo:Getty Images.

Regulators have been closely scrutinising Microsoft's (MSFT) takeover of gaming giant Activision Blizzard (ATVI) and it was announced this week that the tech company has not offered any remedies to the European Commission (EC), which is looking into the legality of the takeover.

Microsoft has not offered any concessions to the EC,  which means the bloc's competition authority now has until 8 November to decide if it will conduct a Phase 2 investigation.

Microsoft only commented in a statement that it was continuing to work with the European Commission to address valid market concerns.

MSFT's share price was down almost 2% on the day the announcement was made and has plummeted 26% since the deal was announced back in January.

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Microsoft (MSFT) offers no concessions to the EC

Microsoft hopes the acquisition of ATVI will help drive better competition in the market among some of its heavyweight peers such as Sony (SNE).

But Sony is far from happy about the deal, and it has already voiced concern over rights to the popular war game Call of Duty (CoD), which is produced by ATVI.

For Sony, the manufacturer and owner of PlayStation - the main rival to Microsoft's X-Box, the key conflict is whether MSFT makes CoD an X-Box exclusive, once the takeover happens.

Back in September MSFT offered to allow Sony to keep the game on PlayStation for three years - an offer that Sony said was “inadequate on many levels”.

MSFT Gaming CEO Phil Spencer revealed to the Verge, that the company is committed to keeping Call of Duty on PlayStation for “several more years” beyond the current marketing deal Sony has with ATVI.

This move has not been welcomed by Sony, which believes it is not a long enough commitment and in fact several years, will more than likely mean three.

MSFT, which intends to buy ATVI for $68.7bn (£56bn) at $95 per share is currently plagued by interference, as global regulators look at the legality of the takeover.

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Meanwhile, the UK's Competition and Markets Authority (CMA) has completed its Phase 2 investigation into Microsoft (MSFT) and on 15 September the group said:

“The CMA has referred the anticipated acquisition by Microsoft Corporation of Activision Blizzard, Inc. for an in-depth investigation.”

MSFT has until 1 March to reply to the CMA’s concerns.

Despite this rising tide of uncertainty, Microsoft Gaming CEO, Phil Spencer is upbeat about the takeover and in a recent Wall Street Journal Tech Live conference, Spencer said regulators investigating the deal have been "fair and honest" and he is confident the takeover will go through.

With that said, investors are becoming uneasy.

Firstly, ATVI shares remain below MSFT’s proposed $95-a-share offer, as investors price in the risk that the takeover may never happen.

Secondly, some investors believe the regulatory questions will scupper the deal and as a result some are fleeing and selling their ATVI stock.

Activision Blizzard (ATVI) share price chart

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Investors start to sell-up

Reports emerged last month that a seller unloaded 3.7 million shares in ATVI, in a move that could indicate a lack of confidence that Microsoft's buyout of Activision Blizzard (ATVI) will go through.

The shares were sold at a price of $72.25, as reported by Seeking Alpha and it seems investors are growing concerned that the deal may be in jeopardy due to regulatory intervention, that many believe will scupper the takeover.

This is a crucial time for ATVI and MSFT and if it manages to pull off the takeover it would have crossed quite a through hurdles to get there.

Markets in this article

ATVI
Activision
80.44 USD
0.14 +0.170%
MSFT
Microsoft
331.44 USD
3.13 +0.950%
SNE
Sony
96.79 USD
2.92 +3.120%

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