I've added two news questions:
All the countries have to approve it?
Yes,
that would be the ideal scenario.
In a cross border transaction like this one the regulators from the different countries or regions are usually coordinated and one of the reasons is to avoid very different outcomes.
For example, maybe the
majority of regulators approve the deal without problems but some of them ask for specific remedies for their local market. That could work for MS/ABK.
Or maybe the
majority of regulators approve the deal but some minors ones don't. In that case, MS/ABK would probably go to court to appeal the decision and would probably win because courts are usually more favorable to parties than regulators. Although that could take some years, if the market is not too big/important, maybe it could work for MS/ABK.
It could also happen that an
important regulator approves the deal (the FTC in US) but another big one rejects it (the EC in Europe). In that case MS/ABK could to go court to appeal the decision but that's going to be a long and tough battle. When that happens the parties usually abandon and cancel the deal.
What happens if the deal doesn't get approved?
The
merger agreement says that MS and ABK expect the deal to close in 12 months (
January 18th 2023) or less. But the agreement also includes two possible extensions of 3 months each one (until
April 18th 2023 and the other one until
July 18th 2023). That's why MS says that they expect the deal to close in fiscal year 2023.
Those extensions apply automatically if by
January 18th 2023 or
April 18th 2023 the transaction is still pending regulatory approval.
The transaction can be terminated by
MS or ABK if:
- Both parties agree.
- The Activision Blizzard stockholders reject it (it was already approved, so it's doesn't apply anymore).
- A court or a regulator rejects the deal and there is no way to appeal it.
- There is a new law that prohibits this kind of deal.
- By January 18th 2023 or April 18th 2023 the deal is still pending but NOT for regulatory reasons.
The transaction can be terminated by
ABK if:
- There is an infringement of the agreement by MS and during the period to resolve that, MS doesn't do anything.
- Before the approval by Activision Blizzard stockholders, ABK receives a better offer and pays MS a $2,270,100,000 termination fee.
The transaction can be terminated by
MS if:
- There is an infringement of the agreement by ABK and during the period to resolve that, ABK doesn't do anything.
- The Activision Blizzard Board of Directors doesn't recommend the deal anymore.
If the deal doesn't happen, someone has to pay for it :p
Activision Blizzard has to pay
Microsoft a termination fee of $2,270,100,000 if:
- MS is still waiting for the ABK stockholders meeting to happen by termination dates.
- Regulatory conditions were not satisfied and the reason is a breach by ABK.
- ABK infringes the agreement.
- The ABK stockholders reject the deal.
- The Activision Blizzard Board of Directors doesn't recommend the deal anymore.
- ABK receives a better offer.
Microsoft has to pay
Activision Blizzard a termination fee of:
- $2,000,000,000, if the termination notice is provided prior to January 18th, 2023.
- $2,500,000,000, if the termination notice is provided after January 18th, 2023 and prior to April 18th, 2023.
- $3,000,000,000, if the termination notice is provided after April 18th, 2023.
Reasons for this possible termination fee in favor of ABK:
- A court or a regulator rejects the deal and there is no way to appeal it.
- There is a new law that prohibits this kind of deal.
- MS infringes the agreement.
- Regulatory conditions were not satisfied and the reason is a breach by MS.
