Microsoft Corp (MSFT) and Activision Blizzard, Inc (ATVI) have recently announced an extension to their $69 billion takeover deal, pushing the deadline back to October 18. This extension allows both companies additional time to finalize the transaction and address any remaining concerns.
One key aspect of the agreement is the increased termination fee that Activision Blizzard will be entitled to if the deal is terminated after certain dates. Such provisions are commonly included in merger agreements to provide protection to the acquiring party.
Another noteworthy detail is the valuation of Activision Blizzard’s commercial Xbox arrangements with Microsoft. For fiscal years 2023 and 2024, these arrangements are expected to be worth up to $250 million. This demonstrates the strategic nature of the partnership between the two companies and highlights the potential for significant collaboration in the future.
In a further positive development for Activision Blizzard shareholders, the company will have the ability to declare and pay a regular cash dividend for fiscal year 2023 of up to $0.99 per share prior to the deal’s closing. This showcases the company’s commitment to providing value to its investors even during the acquisition process.
Activision Blizzard also had impressive financial results for the second quarter, with a revenue growth of 34.2%. This growth can be attributed to the highly anticipated launch of Diablo IV, a popular video game franchise. Furthermore, the company’s net bookings for the quarter reached $2.46 billion, a notable increase from $1.64 billion during the same period last year.
However, it is worth noting that Activision Blizzard’s Monthly Active Users (MAUs) were slightly lower compared to a year ago. This could be due to various factors such as increased competition in the gaming industry or the ongoing challenges posed by the pandemic.
Meanwhile, Microsoft’s appeal against Britain’s competition regulator, the Competition and Markets Authority, has been granted more time to resolve their dispute. This conflict could potentially impact the progress of the acquisition and highlights the complexities involved in such large-scale mergers.
In an effort to secure the merger, Microsoft has also made deals with other industry players. Collaborations with Nvidia Corp and Sony Group Corporation are expected to provide additional support and resources for the acquisition.
At present, both ATVI and MSFT shares are experiencing a slight decline. ATVI shares are down by 0.57% and are currently trading at $92.21, while MSFT shares are down by 0.07% and trading at $359.31. The market will be closely monitoring any developments surrounding the merger, which could influence the future performance of these stocks.
In conclusion, Microsoft and Activision Blizzard’s extended takeover deal provides more time for the two companies to finalize the transaction. The agreement includes various provisions to protect the interests of both parties, and financial details such as valuation and dividends demonstrate the potential benefits for shareholders. Despite the challenges posed by lower MAUs and ongoing legal disputes, both companies remain focused on navigating these hurdles and moving forward with the merger.
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