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Microsoft Corporation will still have to shell out a massive amount even if its acquisition of Activision Blizzard will no longer proceed. This was recently confirmed by the video game publisher’s chief executive officer, Bobby Kotick.
He said that Microsoft will still have to pay $3 billion if their merger falls apart. The CEO said the multi-billion amount will serve as a breakup fee. His statement comes not long after the United Kingdom blocked the merger deal between the Washington-based tech firm and the “Call of Duty” video game developer.
If Microsoft’s proposed takeover of Activision Blizzard fails, the former will still have to hand over billions. The merger has been under review by the antitrust regulatory authorities for several months already.
The regulators are not just from the U.S. but around the world, and while some countries have already given their approval, the acquisition deal hit a serious roadblock after the UK’s Competition and Markets Authority (CMA) refused to give its permission. The agency said the merger could affect the competition in the cloud gaming space thus, it is not in favor.
As a result, Microsoft Corp. and Activision Blizzard said they would file an appeal for the takeover to push through. CMA’s decision is said to be a big blow to the two companies, and in fact, Microsoft aired its frustrations and blasted the regulators for the move it chose.
In any case, this will be a huge loss for Microsoft since it will have to pay a hefty amount and not get anything in return. In an interview with CNBC’s “Squawk Box,” Andrew Ross Sorkin mentioned that Activision Blizzard will still be able to collect $3 billion even if the deal fails, and Kotick quickly answered, “as a breakup fee.”
The Activision Blizzard chief went on to explain, “I think our first focus is trying to get the deal done, which I think is in the interest of the industry of competition. If it were not to get done, you know, by the end of the year, I think we will be sitting on something like $18 billion of cash. And, you know, we have, I think if you look at our 30-year history, we have deployed capital for the benefit of our shareholders very well and we'll continue to do that."
Photo by: Matthew Manuel/Unsplash
