Another hurdle has presented itself in the proposed merger between Microsoft and video game company Activision Blizzard.
Last month, the Federal Trade Commission (FTC) made it clear that it would scrutinize Microsoft’s proposed acquisition of Activision Blizzard through an antitrust lens, ruling on the deal by June 2023. In the meantime, Activision Blizzard shareholders will vote on whether they want the $70 billion deal to occur.
Activision Blizzard shareholders will participate next month in a “non-binding, advisory vote” on the merger, according to an SEC filing. Its Board of Directors has deemed selling the company to Microsoft “advisable” and in the best interests of all parties involved, according to Slash Gear. The board has strongly advised all shareholders to vote and made it clear that those who abstain or fail to vote will be counted as against the merger. The merger cannot be completed without a vote of approval from the majority of Activision Blizzard’s shareholders.
If shareholders vote to move forward with the merger, each will be entitled to $95 in cash per share of Activision Blizzard stock that they own. With shares currently trading at approximately $79, a “yes” vote will result in a more than doubling of net value per share. Also, if the merger occurs, Activision Blizzard will delist from Nasdaq, as it will no longer be a publicly traded company. It will become a subsidiary of Microsoft.
Activision Blizzard also made clear the consequences of a “no” vote on the merger. If shareholders vote against the merger, Activision Blizzard made it clear that the payment of $95 per share will not be made and that the stock price of the company will “decline significantly,” according to GamesIndustry.biz. Furthermore, if the merger does not take place, Activision Blizzard will have to pay Microsoft a termination fee of $2.27 billion, while Microsoft will have to pay Activision Blizzard between $2 billion and $3 billion.
While shareholders prepare for the vote, the FTC has continued to request information from both companies so that it can proceed with its antitrust review of the deal.