The Federal Trade Commission has been unsuccessful in its last-ditch effort to pump the brakes on Microsoft’s $68.7 billion purchase of Activision Blizzard. The Ninth Circuit Court of Appeals declined to grant the agency an emergency stay of a ruling that allows the deal to proceed in the US, leaving a UK regulator as the major outstanding hurdle.
A temporary restraining order was put in place last month to prevent Microsoft and Activision from closing the acquisition until Judge Jacqueline Scott Corley ruled on the FTC’s request for a preliminary injunction. When Corley rejected the FTC’s injunction request this week, she ruled that the agency had until 11:59PM PT on July 14th to obtain an emergency stay from the appeals court. Since that didn’t happen, Microsoft and Activision are now free to close the deal as early as Saturday.
“We appreciate the Ninth Circuit’s swift response denying the FTC’s motion to further delay the Activision deal,” Microsoft president and vice-chair Brad Smith wrote on Twitter. “This brings us another step closer to the finish line in this marathon of global regulatory reviews.”
We appreciate the Ninth Circuit’s swift response denying the FTC’s motion to further delay the Activision deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews.
— Brad Smith (@BradSmi) July 15, 2023
In her injunction ruling, Corley determined the FTC didn’t prove its claims that the merger would harm consumers. The FTC said on Wednesday it would appeal Corley’s decision. On Thursday, it asked the district court that ruled on the preliminary injunction in the first place to block the merger pending the appeal. Hours later, Corley denied that motion.
Back in December, the FTC sued to block the deal on the grounds that it would harm competition. An administrative hearing is set for early August. The agency sought a preliminary injunction to prevent the companies from closing the merger until the antitrust trial takes place. However, the merger deadline is July 18th.
Microsoft and Activision Blizzard are evidently confident of closing the deal by their Tuesday deadline. Activision’s stock will be delisted from the Nasdaq-100 index before the stock market opens on Monday, so the companies may finally seal the deal around that time.
If they can’t do so by the deadline, they’ll have to renegotiate terms or agree to extend the timeline. Otherwise, Activision can choose to walk away with a $3 billion breakup fee from Microsoft in its pocket. That seems unlikely at this point, as both companies are eager to join forces.
Microsoft and Activision have yet to resolve issues with a UK regulator, which blocked the deal over cloud gaming concerns. Microsoft has appealed that decision, but the companies and the Competition and Markets Authority agreed to put their legal battle on hold. The Competition Appeal Tribunal (CAT), which hears appeals on CMA decisions, will decide on July 17th if that pause will take effect.
The CMA said Microsoft and Activision were welcome to restructure the deal but warned that move may trigger a fresh merger investigation. The regulator has extended its deadline for making a decision until the end of August so it has more time to review a “detailed and complex submission” from Microsoft. However, the CMA said it aimed to bring things to a conclusion as soon as possible. Reports have suggested Microsoft could sell some cloud gaming rights in the UK to get the deal over the line.
Update 7/14 10:47PM ET: Added Brad Smith’s comments.