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Activision Shares Up 5% as Microsoft Wins Regulator’s ‘Blessing’ on Acquisition Deal

UTC by Tolu Ajiboye · 3 min read
Activision Shares Up 5% as Microsoft Wins Regulator’s ‘Blessing’ on Acquisition Deal
Photo: Depositphotos

A UK competition regulator eases off slightly on the Microsoft-Activision deal, sending the gaming publisher’s shares soaring. 

Activision Blizzard Inc (NASDAQ: ATVI) shares surged Friday on positive news about the UK’s Competition and Markets Authority’s stance toward the Microsoft (NASDAQ: MSFT) deal. According to reports, the British competition regulator has eased off on the impending Microsoft takeover. In a statement, the CMA stated that it no longer deemed the computer software giant’s acquisition of Activision a threat to gaming competition.

On Friday, Martin Coleman, who presided over the CMA investigation, said:

“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action.”

However, Coleman also pointed out that the regulatory body is still looking into other related gaming matters.

“Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April,” said the chair of the independent expert panel.

Activision Shares Up 5% as Microsoft Looks to Close Acquisition

Activision shares are up more than 5% during the US trading session after the CMA announced its Microsoft verdict. Conversely, the software giant’s stock declined marginally amid a broader market slump.

Nonetheless, the CMA’s seal of approval on the Activision acquisition is a win for Microsoft as it seeks to expand its video game brand. In a statement, a Microsoft spokesperson said:

 “We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome its updated provisional findings.”

The tech company’s renewed commitment to gaming also reflects in the acquisition of Bethesda Softworks’ parent company ZeniMax Media.

The CMA previously feared the worst regarding Microsoft’s acquisition of Activision, citing higher prices and fewer choices. Most notably, the British competition regulator also worried that the deal could hamper competition in the console gaming market. However, the regulator backtracked after receiving substantial feedback from various stakeholders on the deal.

Other Developments from the Deal

Microsoft also recently secured added support from other companies that were previously ambivalent toward the Activision deal or opposed it outrightly. The tech giant won over support by assuring competitors that it would share Activision’s most coveted IP with these other platforms. For instance, Microsoft revealed last month that it inked a binding decade-long legal agreement with Nintendo to share ‘Call of Duty.’

Microsoft also previously expressed a similar stance toward its biggest gaming rival Sony, which produces the wildly popular PlayStation console. However, Sony has yet to play ball with the computer software giant regarding its collaborative offer.

The Bill Gates-founded company offered an olive branch to chip giant Nvidia (NASDAQ: NVDA), which previously opposed the Activision takeover. Microsoft said it signed a deal with the Santa Clara-based company to onboard its Xbox games to Nvidia’s cloud gaming service. In addition, Microsoft plans to bring Activision’s games library to Nvidia’s gaming-focused platform upon the closure of the acquisition.

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