Activision Blizzard: Sale to Microsoft Will Likely Close in October

The U.K. regulator gave its preliminary approval of Microsoft’s acquisition of Activision Blizzard ATVI on Sept. 22. The preliminary approval is based on the restructured deal under which Ubisoft will control the cloud streaming rights to Activision Blizzard games outside of the EU for the next 15 years. Since the deal changes were likely previewed with the Competition and Markets Authority prior to being announced, the preliminary approval is not surprising but still welcomed. We expect that the CMA will provide its final stamp of approval prior to the Oct. 18 merger deadline but after the comment period closing on Oct. 6.

This approval will be the last hurdle to the clear prior to the deal closing which we believe will happen soon after the announcement. While the U.S. Federal Trade Commission is in the process of appealing its case against the combination, the appeals court refused to block the merger in July, paving the way for Microsoft to close the deal upon approval from the CMA. We expect that the FTC will continue to argue in court against the merger but don’t believe the regulator will succeed based on its current strategy. We are maintaining our $95 fair value estimate for Activision Blizzard, equivalent to the merger consideration.