Microsoft complies with FTC in Activision takeover (because it has to)
Microsoft has complied with the Federal Trade Commission’s request for more information regarding the proposed Activision-Blizzard acquisition, sources said. Looking for Alpha.
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Biggest game buyout in history could close next month; By August 17, Microsoft could officially become the new owner of Activision-Blizzard, one of the most powerful and profitable video game publishers on the planet. Federal Trade Commission regulators in the United States are currently evaluating key documents, information and details about Microsoft and Activision-Blizzard to assess whether or not the megaton deal would be fair to investors, consumers and businesses. entire video game market.
The regulatory process for the acquisition appears to be proceeding smoothly and quickly. A few months ago, the president of the Microsoft company, Brad Smith confirmed that the FTC had issued a second request— a step in the regulatory approval process where the FTC collects information about games, winnings and everything else from both companies — and the deal was moving along pretty quickly.
“It’s going fast, at least fast enough for an acquisition of this magnitude”, Smith said at the time. “We are coming to the end of the beginning and now we are entering the beginning of the middle”Microsoft’s legal counsel told Smith.
Now, sources say Microsoft and Activision-Blizzard have responded to the second request by providing the necessary documents and information. According to FTC official website, acquisition agreements in the United States have up to five stages. The $68.7 billion Activision-Blizzard takeover is currently in Stage 4.
- Both parties create a file
- The agreement is submitted to the FTC or DOJ for review
- Deal done or agencies issue second request
- Both parties comply with second request, agency reviews data for 30 days (or longer as parties agree)
- The agency allows the agreement to pass or opposes it in court
Although second application reviews can take up to 30 days, it is entirely possible for the FTC to file extensions so that it can continue to evaluate information and documents provided by Activision-Blizzard and Microsoft. It is therefore more correct to say that the agreement could be approved in August at the earliest.
A second request typically requests business records and data that will inform the agency about the company’s products or services, the market conditions where the company operates, and the likely effects of the merger on competition. The agency may conduct interviews (informally or by sworn testimony) with company personnel or others with knowledge of the industry.
Once the information has been reviewed, agencies can respond in three different ways:
- Do not oppose the agreement, in which the agreement will be concluded
- Issue provisions and amendments to the agreement, in which both parties can make adjustments
- Oppose the deal with a court order (as in the case of NVIDIA’s proposed takeover of ARM)
The FTC also has the power to seek changes or changes to the terms of the acquisition, potentially removing certain studios, games, or even projects from planned exclusivity agreements.
While Microsoft and Activision-Blizzard investors overwhelmingly approved the takeover, the deal has faced opposition from those who claim ATVI shares are being bought at a steep discount. In February 2021, before scathing allegations of sexual abuse and misconduct rocked the game maker, Activision-Blizzard shares were trading at $103.8, and shares fell to $53 just a few months after the outbreak of controversy. Microsoft’s deal offers a cash value of $95 per share, which results in a $68.7 billion buyout.
There’s also the consideration that the game’s exclusivity will materially impact competitors like Sony, who are expected to lose over $260 million a year if only Call of Duty products are retained on the platform. We also felt that Microsoft could losing $1 billion or more keeping Call of Duty titles off competing platforms.
- February 2022 – The FTC begins to review and investigate the Activision-Blizzard takeover for possible antitrust or anti-competitive market trends (Link)
- May 2022 – Microsoft President Says Activision-Blizzard Takeover Deal “Moving Fast” (Link)
- July 2022 – Microsoft complies with the second request