Microsoft and Activision have mutually agreed to extend the deadline for the closure of their merger until October 18, 2023, as stated by Activision. This extension comes with certain modifications, including a higher termination fee and new commercial arrangements.
During its quarterly earnings call, Activision expressed its awareness of economic concerns and increased industry competition. However, the company remains focused on the long-term opportunities ahead and is committed to completing the merger with Microsoft.
The proposed acquisition will see Microsoft purchasing Activision Blizzard for $95 per share in an all-cash transaction. The merger has already obtained approval from the boards of directors of both companies and the shareholders of Activision.
Under the recently reached agreement between Activision Blizzard and Microsoft, certain rights to terminate the merger agreement will be waived if the transaction is not consummated by October 18, 2023. The agreement also stipulates that if the completion of the merger takes place after August 29, 2023, the termination fee payable to Activision Blizzard will be increased from $3.0 billion to $3.5 billion. If the completion occurs after September 15, 2023, the termination fee will be further increased to $4.5 billion.
Additionally, the pact includes amendments to Activision Blizzard’s Xbox commercial agreements with Microsoft, which are valued at up to $250 million for each of the fiscal years 2023 and 2024.
As part of the agreement, Activision Blizzard is allowed to declare and pay a regular cash dividend for fiscal year 2023 of up to $0.99 per share. This dividend will be separate from and not contingent upon the closing of the transaction.
In its recent financial results for the second quarter, Activision reported a net profit of $587 million, representing a significant increase of 109% compared to the $280 million earned in the same quarter of the previous year. Revenues for the quarter amounted to $2,207 million, marking a substantial year-on-year growth of 34.2%.