In the event that the proposed purchase of Activision Blizzard by Microsoft does not go through, the software giant will still be required to pay a breakup fee in the amount of $3 billion.
Microsoft’s suggested purchase of Activision Blizzard has become the subject of an inquiry by governing bodies all over the world for the past few months. Most recently, the deal struck a massive roadblock when the Competition along with the Markets Authority (CMA) in the United Kingdom declined to approve this due to the way it might affect rivalry in the cloud video games space.
Even though both Microsoft as well as Activision has stated that they will be appealing the CMA’s decision, it appears that it is far less probable that the cope will actually go through. This is, of course, a significant setback for both companies.
The reality that Microsoft will continue to have to pay the gaming company Activision Blizzard a large amount, specifically 3 billion dollars as a dissolution fee even in the event that the merger is not approved is like pouring salt on Microsoft’s wounds because it means that the business will not be able to avoid the obligation.
The same information was disclosed in a conversation with Activision Blizzard’s CEO Bobby Kotick that was broadcast on CNBC.
Kotick responded to a question on how the business plans to invest that money in itself by saying, “Well, I believe that our primary focus should be on attempting to close the deal, which is, in my opinion, in the best interest of both the industry as well as the competition.”
In the event that it doesn’t get done, you should know that by the conclusion of the calendar year, I believe we’ll have something on the order of 18 billion dollars in money sitting about. I believe that if you look at our company’s history over the past 30 years, you will see that we have done a good job of allocating money for the betterment of our shareholders, and we will continue to do so.
Naturally, $3 billion is a relatively modest amount in comparison to the 69 billion dollar cost that Microsoft would be paying for the acquisition if it is successful; but, it is still not a trivial number. To put that into perspective that is almost half of the amount Microsoft spent on Bethesda after it acquired the company.
Microsoft will continue to take measures in order to persuade the appropriate authorities that its purchase of Activision Blizzard’s assets would not be detrimental to the competitive landscape.
The company recently inked another 10-year consensus with its cloud computing platform Nware. Anyone’s estimation as to the duration it will be until we have a conclusion to this entire procedure is that it will take a while. However, Microsoft is going on to take action to convince pertinent authorities that its purchase of Activision Blizzard might not harm rivals.
