On October 13, 2023, Microsoft completed its previously announced acquisition of Activision Blizzard, Inc.
Pursuant to the terms of the Agreement and Plan of Merger (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), dated as of January 18, 2022, by and among Microsoft, Activision Blizzard and Anchorage Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Microsoft (“Merger Sub”), at the effective time of the Merger (the “Effective Time”), Merger Sub merged with and into Activision Blizzard (the “Merger”), with Activision Blizzard surviving the Merger as a wholly owned subsidiary of Microsoft.
At the Effective Time, each share of Activision Blizzard common stock, par value $0.000001 per share (the “Activision Blizzard Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares of Activision Blizzard Common Stock (i) held by Activision Blizzard as treasury stock (excluding certain shares of Activision Blizzard Common Stock held by a wholly owned subsidiary of Activision Blizzard, which shares remained outstanding and unaffected by the Merger), (ii) owned by Microsoft or Merger Sub, (iii) owned by any direct or indirect wholly owned subsidiary of Microsoft or Merger Sub or (iv) held by Activision Blizzard stockholders who neither voted in favor of adoption of the Merger Agreement nor consented thereto in writing and who had properly and validly exercised their statutory rights of appraisal in respect of such shares of Activision Blizzard Common Stock in accordance with Section 262 of the Delaware General Corporation Law, in each case, as of immediately prior to the Effective Time), was cancelled and automatically converted into the right to receive $95.00 in cash (the “Per Share Amount”), without interest.
In addition, at the Effective Time, subject to certain exceptions, unvested Activision Blizzard options and stock-based awards were assumed by Microsoft and converted into corresponding awards that are subject to shares of Microsoft common stock. Vested Activision Blizzard options and stock-based awards were cancelled and converted into the right to receive the Per Share Amount for each share of Activision Blizzard Common Stock underlying such awards (or, in the case of such options, the difference (if any) between the Per Share Amount and the applicable exercise price), less any applicable tax withholdings.
In August this year Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights. This new deal will put the cloud streaming rights (outside the EEA) for all of Activision’s PC and console content produced over the next 15 years in the hands of a strong and independent competitor with ambitious plans to offer new ways of accessing that content.
As a result of this concession, the CMA agreed to look afresh at the deal and launched a new investigation in August. That investigation has completed today with the CMA clearing this narrower transaction.
The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers. It will allow Ubisoft to offer Activision’s content under any business model, including through multigame subscription services. It will also help to ensure that cloud gaming providers will be able to use non-Windows operating systems for Activision content, reducing costs and increasing efficiency.
In its original investigation, the CMA found Microsoft already held a strong position in relation to cloud gaming and blocked the deal.
The sale of Activision’s cloud streaming rights to Ubisoft will prevent the distribution of important, popular content – including games such as Call of Duty, Overwatch, and World of Warcraft – from coming under the control of Microsoft in relation to cloud gaming. The restructured deal substantially addressed the concerns that the CMA had following its original investigation, which concluded earlier this year.
The CMA did identify limited residual concerns with the new deal, but Microsoft gave undertakings that will ensure that the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA.
The CMA consulted on these undertakings and is satisfied that this will provide the safety net needed to make sure this deal is properly implemented.
“We now have all regulatory approvals necessary to close and we look forward to bringing joy and connection to even more players around the world… We’re excited for our next chapter together with Microsoft and the endless possibilities it creates for you and for our players.” said Activision Blizzard CEO Bobby Kotick in an email to employees.
"We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide," added Microsoft Vice Chair and President Brad Smith.
"The CMA is resolute in its determination to prevent mergers that harm competition and deliver bad outcomes for consumers and businesses. We take our decisions free from political influence and we won’t be swayed by corporate lobbying. We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that. With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome. But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA. Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money," stated Sarah Cardell, Chief Executive of the CMA.
"Cloud gaming is an important new way for gamers to access games and this deal could have seriously undermined its potential development. On that we, the European Commission and the US Federal Trade Commission are in full agreement. Where we differ is on how we solve that problem. We rejected a solution put to us by the parties which would have left Microsoft with too much control. We now have a new transaction in which the cloud distribution of Activision games, old and new, is taken away from Microsoft and put into the hands of Ubisoft, an independent party who is committed to widening access to the games. That’s better for competition, better for consumers and better for economic growth," said Martin Coleman, Chair of the Independent Panel who reviewed the original Microsoft deal.