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[Ar¢tos]

If CMA is the only one blocking it, I'm pretty sure Microsoft will just circumvent it, in a way. How I don't know, that's for the lawyers, but they are not going to let a single market block it for the rest of the world.

There is no way to circumvent it. Both MS and ATK operate in the UK, there is no way for MS to buy ATK if the CMA block holds.
The consequences would be astronomical.

 

[Heisenberg007]

It’s literally the second biggest market for Xbox and a significant market for Activision. Not even talking about the fact that Rare and Playground are UK-based internal teams with crucial franchises. At this point, it’s not worth it for both parties and it’s cheaper to go their separate way after the deadline.

+ the fine.

 

[Helghan]

It’s literally the second biggest market for Xbox and a significant market for Activision. Not even talking about the fact that Rare and Playground are UK-based internal teams with crucial franchises. At this point, it’s not worth it for both parties and it’s cheaper to go their separate way after the deadline.

It's your assumption that they might think it's easier to go there separate ways. I'm not so sure of that since this is a buy of 68B.

 

[ShaiKhulud1989]

I'm not so sure of that since this is a buy of 68B.

Well, the fine is 20b, the breakout fee is 3b. And MS will keep the 65b for themselves.

 

[Duchess]

So why is MS still pushing this forward?

Because they're arrogant.

 

[ShaiKhulud1989]

Because they're arrogant.

They are obliged to try and keep the deal alive before the deadline. It’s a circus for the sake of a breakout fee.

 

[Mobilemofo]

Your theory remembers a friend of mine saying PCs weren't made to play games but for work.

Braindead dude, take that as you will

You ever played descent on a pentium 2 from back in the day? You'd wish you had kept it to work only.

 

[Helghan]

Well, the fine is 20b, the breakout fee is 3b. And MS will keep the 65b for themselves.

Missed the fine part, what's that exactly? Can't even find it when googling Microsoft Activision Blizzard "fine" "20 Billion"\

Edit: Found it, that's something that was only said here. A fine of 20B is not going to happen. Also depends completely on the remedy they choose to implement for this situation.

 

[StealthGoblin]

There is no way to circumvent it. Both MS and ATK operate in the UK, there is no way for MS to buy ATK if the CMA block holds.
The consequences would be astronomical.

Plus their own agreement has set EU, US and U.K. approval as conditions for the merger.

 

[EdGalTBR]

Actvision worth more than UK market for Microsoft. They should just go ahead and close the deal.

 

[ShaiKhulud1989]

Missed the fine part, what's that exactly? Can't even find it when googling Microsoft Activision Blizzard "fine" "20 Billion"

CMA will be granted a power to fine companies for 10% of their global revenue if they try to break or circumvent CMA's regulations. That will be 20b for MS.

 

[Helghan]

CMA will be granted a power to fine companies for 10% of their global revenue if they try to break or circumvent CMA's regulations. That will be 20b for MS.

Just because they have that power, that doesn't mean will actually use it. Also this is a whole different legal matter that will definitely show up in court too, because there's no way that if Microsoft circumvents it AND CMA asks for 20B, that Microsoft isn't going to fight this. Will be a battle of multiple years, and if Microsoft is confident they won't lose that fight, the 20B find can be ignored in your previous equation.

 

[Varteras]

 

[Godot25]

This is getting so ridiculous that is not even funny

FTC: We are gonna drag this and there is no need to hurry, because CMA block the deal

CMA: We are gonna drag this and there is no need to hurry, because FTC sued this merger

Microsoft:

I just wonder if Microsoft baited FTC for PI with "uuuuuu, we are gonna close" or they just straight told them that they are closing the deal after certain date while yanking CMA's approval as a one condition for closing a deal and FTC had no other choice.

 

[Heisenberg007]

This is getting so ridiculous that is not even funny

FTC: We are gonna drag this and there is no need to hurry, because CMA block the deal

CMA: We are gonna drag this and there is no need to hurry, because FTC sued this merger

Microsoft:

I just wonder if Microsoft baited FTC for PI with "uuuuuu, we are gonna close" or they just straight told them that they are closing the deal after certain date while yanking CMA's approval as a one condition for closing a deal and FTC had no other choice.

I think "MS closing the deal circumventing the CMA" was smoke. And FTC filed the injunction to make the potential renegotiation b/w MS and ABK even tougher. And that the FTC was always planning to file the injunction around this time. That's my theory right now.

 

[Godot25]

I think "MS closing the deal circumventing the CMA" was smoke. And FTC filed the injunction to make the potential renegotiation b/w MS and ABK even tougher. And that the FTC was always planning to file the injunction around this time. That's my theory right now.

But that makes no sense. Because by requesting for injunction they actually sped up entire process. If judge won't give FTC an injunction, Microsoft can basically tell them to fuck off and close without worry about FTC. And we know how "successful" FTC is in those cases. It's way easier to renegotiated the deal if Microsoft and ABK knows exact schedule when deal can be potentially closed. Because with FTC stalling deal in their wanabe court, this could drag until 2024 without any significant progress.

Just using a plain logic. If Microsoft and Activision knows that by XYZ. August they can close a deal thanks to no-injuction and CAT sending case back to CMA isn't it easier to renegotiate extension of merger agreement that it is with FTC stalling case in their court?

 

[reksveks]

Well, the fine is 20b, the breakout fee is 3b. And MS will keep the 65b for themselves.

The cap of the fine would 10% of global revenue aka 20b. Not that has to be that.

If the new bill has a similar process as it currently stands, there is a process to how they determine the size of the fine.

Appropriate CA98 penalty calculation: CMA73

Sets out the basis on which the CMA calculates financial penalties for CA98 infringements.

www.gov.uk

Obviously the CMA could go to 10% but MS would definitely take that to court as well.

 

[ShaiKhulud1989]

Obviously the CMA could go to 10% but MS would definitely take that to court as well.

Considering how angry CMA is with MS, I'll bet they will hammer the button in full lol.

But this is just pure drama. I pray that July deadline will end this saga once and for all.

 

[reksveks]

Considering how angry CMA is with MS, I'll bet they will hammer the button in full lol.

But this is just pure drama. I pray that July deadline will end this saga once and for all.

Maybe, it would be interesting to see them justify in court how they go from the baseline of 30% of ABK revenue (2.4bn) as is the current first step to 20bn. Think that's adding 1.5x the whole cloud market to the fine (could be off on that one).

 

[Heisenberg007]

Maybe, it would be interesting to see them justify in court how they go from the baseline of 30% of ABK revenue (2.4bn) as is the current first step to 20bn. Think that's adding 1.5x the whole cloud market to the fine (could be off on that one).

If MS bypasses the regulatory law of the United Kingdom, I think the CMA will be in a position to fine them the heaviest, and MS will have a hard time to appeal to the same jurisdiction to lower the penalty that they just circumvented and made a mockery of.

 

[Godot25]

Maybe, it would be interesting to see them justify in court how they go from the baseline of 30% of ABK revenue (2.4bn) as is the current first step to 20bn. Think that's adding 1.5x the whole cloud market to the fine (could be off on that one).

If CMA believe their case in cloud gaming and how BIIIIIG it will get, they should fine Microsoft for 50% of all xCloud revenue in next 20 years.
So...it will be 25 million dollars from 2021 if I remember correctly

 

[jm89]

If MS bypasses the regulatory law of the United Kingdom, I think the CMA will be in a position to fine them the heaviest, and MS will have a hard time to appeal to the same jurisdiction to lower the penalty that they just circumvented and made a mockery of.

Yeah can you imagine they end up giving them a small fine that MS can pay off with satyas pocket change. Other big tech companies will be laughing at the CMA going forward.

 

[Heisenberg007]

But that makes no sense. Because by requesting for injunction they actually sped up entire process. If judge won't give FTC an injunction, Microsoft can basically tell them to fuck off and close without worry about FTC. And we know how "successful" FTC is in those cases. It's way easier to renegotiated the deal if Microsoft and ABK knows exact schedule when deal can be potentially closed. Because with FTC stalling deal in their wanabe court, this could drag until 2024 without any significant progress.

Just using a plain logic. If Microsoft and Activision knows that by XYZ. August they can close a deal thanks to no-injuction and CAT sending case back to CMA isn't it easier to renegotiate extension of merger agreement that it is with FTC stalling case in their court?

That is true.

So the deal has to be renegotiated before July 18. And we know, at least from public information, that they haven't started yet. So they have ~33 days to renegotiate the deal and have shareholders sign off on it.

My guess is that the FTC wants that conversation to be tougher. If the negotiation is failed because shareholders point to both the CMA and FTC blocking the acquisition, the deal falls through -- even if the court later decides to flip off the FTC.

For that theory to work, what if the FTC knew that MS/ABK were meeting for renegotiation like later this week? During this period, both the FTC and CMA have blocked it. The US court has also temporarily restricted MS from buying ABK. And MS proposes to ignore all that (and $3 billion) to ABK shareholders and instead renew the contract. That's a tough sell.

Lots of assumptions, I know, but that's why I said it's just my theory.

 

[feynoob]

EU is making moves against these big techs. Hopefully this puts a stop to MS.

 

[feynoob]

Hope for July to come fast.
If MS closes before that, then prepare your popcorn.

 

[Godot25]

My guess is that the FTC wants that conversation to be tougher.

I agree. But I think that uncertainty is what makes this conversation tougher. If judge won't grant PI (and since it is same judge who refused PI in "gamers" case it is highly probably FTC won't get an injunction either) Microsoft would have better shot to extend the merger even if they don't want to circumvent CMA. Which I think it's still highly possible. Especially because they will by then know the exact timeline. Which is better ground for extension as "We don't know when FTC will be fucking done with their case in administrative court but it won't be until 2024."

I have no doubts that if they will extend the merger agreement breakup fee will go up but I doubt that ABK would want more money per share. They just want out (I think) and 95$ per share is still way more then they will get at stock market. Even after huge success of Diablo IV and monster success of Modern Warfare II and success of Ovewatch 2 it did not move a needle in terms of share price so if deal goes under I doubt that share price will go over 75$ per share. Currently that share price is driven entirely by expectation that Microsoft will/won't close the deal.

I would really not be surprised if Microsoft closed the deal before expiration date (if no injunction) even over CMA...17th July? Maybe?

 

[reksveks]

If MS bypasses the regulatory law of the United Kingdom, I think the CMA will be in a position to fine them the heaviest, and MS will have a hard time to appeal to the same jurisdiction to lower the penalty that they just circumvented and made a mockery of.

There is a process though and MS will be fighting a fine of 20bn, 20bn is a 8x of the starting line as it stands. The EC do quite regularly reduce fines from the DGCOMP. Might just have to see what happens, probably going to be a question that we never know the answer for.

EU is making moves against these big techs. Hopefully this puts a stop to MS.

That's basically a true monopoly and it's definitely not nascent.

 

[Varteras]

Hope for July to come fast.
If MS closes before that, then prepare your popcorn.

I'll start with the popcorn. Move up to a couple bottles of moscato.

 

[feynoob]

I agree. But I think that uncertainty is what makes this conversation tougher. If judge won't grant PI (and since it is same judge who refused PI in "gamers" case it is highly probably FTC won't get an injunction either) Microsoft would have better shot to extend the merger even if they don't want to circumvent CMA. Which I think it's still highly possible. Especially because they will by then know the exact timeline. Which is better ground for extension as "We don't know when FTC will be fucking done with their case in administrative court but it won't be until 2024."

I have no doubts that if they will extend the merger agreement breakup fee will go up but I doubt that ABK would want more money per share. They just want out (I think) and 95$ per share is still way more then they will get at stock market. Even after huge success of Diablo IV and monster success of Modern Warfare II and success of Ovewatch 2 it did not move a needle in terms of share price so if deal goes under I doubt that share price will go over 75$ per share. Currently that share price is driven entirely by expectation that Microsoft will/won't close the deal.

I would really not be surprised if Microsoft closed the deal before expiration date (if no injunction) even over CMA...17th July? Maybe?

If MS leaves the deal, the stock price of Activision will go down.
That harassment lawsuit is still hunting the company.

 

[Godot25]

If MS leaves the deal, the stock price of Activision will go down.
That harassment lawsuit is still hunting the company.

I have no doubts it will go down.
Question is by how much.
Because if current price is around 80$+ per share I can see shareholders of ABK wanting more money from Microsoft when they will talk about extension. But I highly doubt price would be that high.

 

[feynoob]

I have no doubts it will go down.
Question is by how much.
Because if current price is around 80$+ per share I can see shareholders of ABK wanting more money from Microsoft when they will talk about extension. But I highly doubt price would be that high.

More than 100$ is a deal off for MS.

 

[Godot25]

More than 100$ is a deal off for MS.

Considering that 3 billion is current breakup fee, I'm not sure that 100$ per share would a dealbreaker. Especially with how much money Microsoft is raking quarterly in pure profit.

 

[Heisenberg007]

If MS leaves the deal, the stock price of Activision will go down.
That harassment lawsuit is still hunting the company.

But then they will receive a cash injection of $3 billion, which is almost equal to 2 years of their annual profit, and then the share price will go up again.

That's why those break-up fees are a thing in the first place.

 

[harry mason 1989]

I think MS will acquire playstation division next imo
And apple will buy Nintendo soon after

 

[Astray]

But then they will receive a cash injection of $3 billion, which is almost equal to 2 years of their annual profit, and then the share price will go up again.

That's why those break-up fees are a thing in the first place.

Just a correction here: It won't go up because of the 3 billion. But it can go up if Kotick elects to use those funds to do a stock buy-back program.

 

[jm89]

I think MS will acquire playstation division next imo
And apple will buy Nintendo soon after

 

[mansoor1980]

I think MS will acquire playstation division next imo
And apple will buy Nintendo soon after

 

[Helghan]

But then they will receive a cash injection of $3 billion, which is almost equal to 2 years of their annual profit, and then the share price will go up again.

That's why those break-up fees are a thing in the first place.

It's a single cash injection of 3B for a company that has ~8B in revenue on a yearly basis and was validated by Microsoft to be worth 68B. A 3B cash injection doesn't have such a big impact on it as you might think. On top of that, if they are willing to sell you are not first going to ask them to pay that 3B fee, since they might see it as handling in bad faith so they might drop the deal. Sure you still got that 3B extra, but you blew up the deal.

I only see that 3B being paid if both parties think the deal isn't going to go through.

 

[Heisenberg007]

Just a correction here: It won't go up because of the 3 billion. But it can go up if Kotick elects to use those funds to do a stock buy-back program.

Yes, buyback will certainly expedite that, but it will go up even without it. A cash flow injunction will improve the financial health of the company and incentivize people to buy more stocks. Demand will go up, which will push the stock price up.

 

[Astray]

It's a single cash injection of 3B for a company that has ~8B in revenue on a yearly basis and was validated by Microsoft to be worth 68B. A 3B cash injection doesn't have such a big impact on it as you might think. On top of that, if they are willing to sell you are not first going to ask them to pay that 3B fee, since they might see it as handling in bad faith so they might drop the deal. Sure you still got that 3B extra, but you blew up the deal.

I only see that 3B being paid if both parties think the deal isn't going to go through.

The 3b is payable if the deal doesn't close before the deadline. Until the deadline lands Activision are required to play ball, but once July 18 ends with no closure they will turn around and ask for that 3 billion.

You are correct that on its own it won't really do much to raise the stock price, but it can aid in either buybacks (which would raise the price) or in acquiring studios/IP that can help the company grow.

 

[ToadMan]

More than 100$ is a deal off for MS.

When the deal was announced ATVI was around $55. But it had plunged to that level from more like $93 shortly before the deal was announced.

MS offer was an 80% uplift on that $55 price roughly, but in reality ABK was oversold and was probably fundamentally worth around $70 per share and MS offered about a 30% uplift which is the going rate for acquisitions like this.

Fast forward to July 18 this year. The price of ABK is kind of being held in limbo waiting for the outcome of this process.

If ABK shareholders want to renegotiate price for extension they should be asking for around $140 per share - 30% acquisition uplift plus the rampant inflation we’ve seen since the deal was struck. And of course a successful launch of Diablo 4 reducing risk and makes the value of ABK higher.

If I was an ATVI shareholder now - I’d be wanting this outcome. Renegotiate the price because I’d stand to gain a big chunk more.

If the renegotiation fails and MS walk away, the shares are going to be worth $95 on the open market anyway now - the point of selling to MS is to get a premium price.

Oh and of course MS recognises the above and wants to avoid renegotiating the price. They probably would walk away at that point.

 

[Thirty7ven]

So for those of us that don’t understand this process, what’s being determined by this judge is whether or not a preliminary injunction is approved or not?

Can anybody explain why this judge would say no and allow MS to close the deal right now and bypass regulators even though it’s blocked in the UK as of right now, only passed with remedies in the EU, and the August date has been set for quite a while in advance which in itself gave many months for MS and ABK to agree to a new date in their merger agreement?

It sounds nonsensical to people outside the USA I think, so anybody want to explain how that works?

 

[Godot25]

If ABK shareholders want to renegotiate price for extension they should be asking for around $140 per share - 30% acquisition uplift plus the rampant inflation we’ve seen since the deal was struck. And of course a successful launch of Diablo 4 reducing risk and makes the value of ABK higher.

And that's exactly why you are not a shareholder or not at board of company.
140$ per share is lunacy. There is no way Activision shareholders would request that since they know they are not getting that.
So it's either 95$ per share (or maybe slightly more) or deal is going under and you can have your 70$ per share on stock market. I think I know what would shareholders of ABK choose.

Shares of ABK are not going to hit 95$ per share of the deal goes under. If that was a case it would already be there. Fact that Diablo IV launch did not move a needle in terms of share price indicates that current share price is still dependant on Microsoft's chances to close the deal and it does not reflect current economic performance of ABK. I recently read on other forum from Idas that analysts suggests that price of ABK without Microsoft is at 75-80$ range.

 

[Helghan]

The 3b is payable if the deal doesn't close before the deadline. Until the deadline lands Activision are required to play ball, but once July 18 ends with no closure they will turn around and ask for that 3 billion.

I understand that the 3B is payable, and Activision is completely in their right to ask for it. I just mean that if Activision still wants to sell to Microsoft and believe this can happen after July 18, they probably won't demand it since Microsoft might see this as an insult.

Also it's normal to have such a fee in these contracts, but based on how close they are with each other I wouldn't be surprised that Activision never asks for that 3B even if the deal doesn't go through.

 

[ToadMan]

And that's exactly why you are not a shareholder or not at board of company.
140$ per share is lunacy. There is no way Activision shareholders would request that since they know they are not getting that.
So it's either 95$ per share (or maybe slightly more) or deal is going under and you can have your 70$ per share on stock market. I think I know what would shareholders of ABK choose.

Shares of ABK are not going to hit 95$ per share of the deal goes under. If that was a case it would already be there. Fact that Diablo IV launch did not move a needle in terms of share price indicates that current share price is still dependant on Microsoft's chances to close the deal and it does not reflect current economic performance of ABK. I recently read on other forum from Idas that analysts suggests that price of ABK without Microsoft is at 75-80$ range.

End of July ABK will put out their earnings and D4 has been a hit.

Without the artificial limit of the MS $95 buy price, this would be in that ballpark already.

That will happen and it’s why MS would run the risk of fines and other punishment to buy at $95 now. It wont be $95 after July 18.

 

[Godot25]

End of July ABK will put out their earnings and D4 has been a hit.

Without the artificial limit of the MS 9
$95 buy price, this would be in that ballpark already.

That will happen and it’s why MS would run the risk of fines and other punishment to buy at $95 now. It wont be $95 after July 18.

You are seriously posting share price graph for 5 years period where you can't read shit?
Again. Analysts are suggesting 75-80$ price per share even after Diablo IV without Microsoft's deal. Your 95$ suggestion is pure lunacy based on nothing but dreams. If ABK was worth 95$ per share currently it would have that price on market with or without Microsoft. Fact that share price fluctuates based on Microsoft's chances to finish the deal suggests that actual share price of ABK is below that value.

I'm not expecting that price would stay at 95$ per share if they would have to renegotiate the deal. But your suggestion of 140$ per share is insanity based on...what exactly?

 

[sankt-Antonio]

That's basically a true monopoly and it's definitely not nascent.

And should have been stopped at a time where is was on the verge of becoming a "true" monopoly. Just like MS/Acti merger.

 

[Astray]

Also it's normal to have such a fee in these contracts, but based on how close they are with each other I wouldn't be surprised that Activision never asks for that 3B even if the deal doesn't go through.

This isn't like when I forget $10 at a buddy's place and tell him "it's ok have it", it's 3 BILLION.

I assure you that Smith will hear from ABK's representation the moment this 3 billion is legal to collect. And it might actually descend into a legal battle too. People are not lameducks when billions are on the line.

 

[feynoob]

When the deal was announced ATVI was around $55. But it had plunged to that level from more like $93 shortly before the deal was announced.

MS offer was an 80% uplift on that $55 price roughly, but in reality ABK was oversold and was probably fundamentally worth around $70 per share and MS offered about a 30% uplift which is the going rate for acquisitions like this.

Fast forward to July 18 this year. The price of ABK is kind of being held in limbo waiting for the outcome of this process.

If ABK shareholders want to renegotiate price for extension they should be asking for around $140 per share - 30% acquisition uplift plus the rampant inflation we’ve seen since the deal was struck. And of course a successful launch of Diablo 4 reducing risk and makes the value of ABK higher.

If I was an ATVI shareholder now - I’d be wanting this outcome. Renegotiate the price because I’d stand to gain a big chunk more.

If the renegotiation fails and MS walk away, the shares are going to be worth $95 on the open market anyway now - the point of selling to MS is to get a premium price.

Oh and of course MS recognises the above and wants to avoid renegotiating the price. They probably would walk away at that point.

The original price was 82$. Activision asked for more and MS settled with current price.

 

[Heisenberg007]

The 3b is payable if the deal doesn't close before the deadline. Until the deadline lands Activision are required to play ball, but once July 18 ends with no closure they will turn around and ask for that 3 billion.

You are correct that on its own it won't really do much to raise the stock price, but it can aid in either buybacks (which would raise the price) or in acquiring studios/IP that can help the company grow.