What you need to know
- Microsoft announced it would be acquiring Activision Blizzard King—the publishers behind gaming powerhouse franchises like Call of Duty, World of Warcraft, Diablo, and Candy Crush—in January of 2022.
- The deal has undergone significant legal scrutiny from regulatory bodies with 39 countries having approved the deal.
- The UK's CMA has been the only country to reject the acquisition.
- The FTC in the US filed for a preliminary injunction to stop the acquisition from closing, but it was denied. An appeal of the decision has been filed by the FTC.
- AInvest Wire shared on Twitter that Trade Desk will be replacing Activision ($ATVI) on the Nasdaq-100 on Monday July 17.
- The move by ABK to leave the Stock Exchange could be in preparation to close the ABK deal should the FTC's appeal fail to grant an injunction.
According to a press release on GlobeNewswire, Nasdaq announced that The Trade Desk, Inc would be joining the Nasdaq-100 Index as a replacement for Activision Blizzard, Inc, with ABK set to be removed from the listing prior to the market opening on Monday, July 17. Activision Blizzard's removal from the Nasdaq-100 Index could be seen as the company preparing to close its deal to merge with Xbox.
The announcement of ABK's exit from the Stock Exchange comes fresh on the heels of the FTC filing an appeal of Judge Jacqueline Corley's refusal to issue a preliminary injunction to stop the acquisition from closing. A Temporary Restraining Order (TRO) is currently holding the deal at bay while court proceedings are underway, but the TRO is set to expire on Friday. With the TRO out of the way, the only thing hindering Microsoft and ABK from completing the acquisition is a decision regarding the appeal from the 9th Circuit Court and the UK's Competition and Markets Authority (CMA).
Regarding the FTC's appeal, Vice Chair and President of Microsoft Brad Smith had this to say, "The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers. We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward." Meanwhile, in an interview with CNBC Bobby Kotick had expressed his feelings that an appeal of the ruling by the FTC would be wasting taxpayer money.
The motion to remove ABK from the stock exchange could signal that leadership from Microsoft and Activision Blizzard both feel confident enough that the 9th Circuit Court will not see fit to overrule Judge Corley and grant the FTC the injunction. Thus, the two corporations may be making the early moves necessary to close the deal as soon as the TRO expires. The closure would still be in spite of the rejection of the deal by the CMA, however.
Following Judge Corley's refusal to grant the FTC an injunction both the CMA and Microsoft agreed to stay their appeals with the UK Tribunal in an attempt to settle out of court. Microsoft has agreed to small divestures (most likely in the cloud gaming sector where the CMA expressed concerns) in order to push the deal through but the CMA has said that any such move would require the regulatory process to start at the beginning with a fresh investigation.
Despite any perceived progress, it appears it's going to be a long week of watching stock exchanges and the movement of the courts while we wait to see how things play out. The current deal negotiated between Microsoft and Activision Blizzard is set to expire on July 18, and it seems like both the FTC and the CMA alike are willing to play the stalling game as long as possible to block the merger. Whether or not it is a successful strategy remains to be seen.
