Microsoft submits new plan in £54bn takeover battle with UK competition watchdog
22 August 2023, 12:24
The Competition and Markets Authority had originally blocked the multibillion-dollar deal.
The competition watchdog stressed “this is not a green light” as it agreed to look at a fresh proposal from Microsoft which the company hopes will allow its 69 billion US dollar (£54 billion) takeover of Activision Blizzard to go ahead.
The global technology giant said it has submitted a new version of the blocked deal, which will now be reviewed by the Competition and Markets Authority (CMA).
It came as the regulator confirmed on Tuesday that Microsoft’s original plan to buy the computer games company “cannot proceed”.
Microsoft has proposed a new, restructured deal to acquire Activision and submitted it to the CMA for review.
The CMA has now opened a new phase 1 investigation into the deal. https://t.co/PaPjK1nVZu
— Competition & Markets Authority (@CMAgovUK) August 22, 2023
Under the new proposal, Microsoft would sell off its rights to offer games via the cloud for new or existing Activision PC or console games for the next 15 years outside the European Economic Area (EEA).
It will instead sell those rights to Ubisoft, a rival developer known for the Assassin’s Creed and Far Cry games series.
This is designed to ensure that gamers have access to Activision Blizzard’s games, even on consoles and computers not made by Microsoft.
The CMA will now launch a new probe into this deal, a so-called Phase 1 investigation.
CMA chief executive Sarah Cardell said: “The CMA has today confirmed that Microsoft’s acquisition of Activision, as originally proposed, cannot proceed.
“Separately, Microsoft has notified a new and restructured deal, which is substantially different from what was put on the table previously
“This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.”
Microsoft president Brad Smith said: “Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service, Xbox Cloud Gaming, or to exclusively control the licensing terms of Activision Blizzard games for rival services.”
It marks a new twist in the case, the biggest fight the CMA has taken on since gaining new post-Brexit powers. At one point the case looked like as though it would only end after a court battle.
In January 2022 Microsoft announced that it planned to buy Activision Blizzard, the company behind the Call Of Duty and World Of Warcraft games, for an eye-watering sum.
When the UK was still an EU member, a deal of that size would have been assessed by regulators in Brussels. But after Brexit the CMA now has the power to investigate such deals itself.
Although both companies are American, both have significant businesses in the UK so their tie-up could have a significant impact on competition here.
Activision Blizzard chief executive Bobby Kotick said: “For us, nothing substantially changes with the addition of this divestiture: our merger agreement with Microsoft, closing deadline, and the cash consideration to be paid for each Activision Blizzard share at closing remain the same.
“We will continue to work closely with Microsoft and the CMA throughout the remaining review process, and we are committed to help Microsoft clear any final hurdles as quickly as possible.
“This has been a longer journey than expected, and I am very proud of how focused everyone has remained on delivering great games.”
