Microsoft proposes Ubisoft license to win U.K. approval for Activision Blizzard buyout

By Steve Goldstein

Microsoft will change the terms of its Activision Blizzard buyout offer in a new effort to win approval from the U.K. competition regulator.

The regulator, the Competition and Markets Authority, said Microsoft (MSFT) will now license Activision's global cloud streaming to Ubisoft Entertainment, for any game available now or in the next 15 years. Ubisoft, in its own release, highlighted the ability to stream the popular Call of Duty franchise.

Financial terms were not released, but the regulator said Ubisoft will make a one-off payment and also agree a market-based wholesale pricing mechanism.

The license will be exclusive except in the European economic area. Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows, such as Linux.

Ubisoft shares jumped 8% in Paris trade.

"The deal would strengthen UBI's own cloud-based gaming service, Ubisoft+, making its content offering one of the most attractive in the market, and give it the right to licence Activision's content to other streaming services," said JPMorgan analyst Daniel Kerven in a note to clients. He said cloud gaming is a relatively small size of the market now, at under 5%, but could become an important platform for gaming in the future.

The regulator now says it's inviting comments on the structure of the new offer. "This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments," said the regulator's CEO, Sarah Cardell.

Microsoft last year agreed to buy Activision Blizzard for $68.7 billion, or $95 per share. Activision stock (ATVI) rose 1% to $91.67 in premarket trade.

In a blog post, Microsoft Vice Chair Brad Smith said it anticipates the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on Oct.18. He also said the deal with Ubisoft was carefully structured not to interfere with an existing deal struck with European regulators.

Microsoft stock rose 1% in premarket trade and has gained 34% this year on hopes for artificial-intelligence-related services.

-Steve Goldstein

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08-22-23 0800ET

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