Activision sees U.K. regulator drop major concern about Microsoft deal
By Steve Gelsi and Emily Bary
Stock on track for highest close since Microsoft acquisition was announced
Activision Blizzard Inc. stock was up nearly 6% in afternoon trading Friday after the U.K.'s Competition and Markets Authority said it was narrowing the scope of concerns that it had about the company's pending acquisition by Microsoft Corp.
The U.K. regulator, which has been reviewing the deal, said in a Friday release that it has "received a significant amount of new evidence in response to its original provisional findings."
"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," said Martin Coleman, chair of the independent panel of experts that's reviewing the deal for the CMA.
Activision shares (ATVI), up about 6%, were on track for their largest single-day percentage gain since Jan. 18, 2022, when they rose 25.9% on the day of the Microsoft (MSFT) deal announcement. The stock, which recently changed hands above $84, is on track to close at its highest level since the acquisition was announced. Microsoft's deal price was $95 a share.
"The CMA's updated provisional findings show their deepened understanding of console gaming and demonstrate a commitment to supporting players and competition," an Activision Blizzard spokesperson said in a statement. "We appreciate the CMA's investment in an industry they helped pioneer, and that will continue to be vital for growth in the UK."
See more: Microsoft bets on the metaverse with $69 billion deal for Activision Blizzard
Shares of Microsoft were up 0.5% in Friday afternoon trading.
The CMA said the new evidence "provisionally alleviates concerns" over gaming consoles in the U.K. but doesn't impact the authority's prior concerns about the cloud-gaming market.
The investigation is on track to be complete by the end of April.
"The CMA announcement strongly suggests that the EU and FTC will follow suit and clear the deal in the coming weeks," Wedbush analyst Nick McKay wrote in a note to clients.
-Steve Gelsi
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March 24, 2023 15:47 ET (19:47 GMT)
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