Mergers and Acquisitions: Why Microsoft's Deal Took 633 Days

Microsoft agreed to buy Activision Blizzard on 18 January 2022 for $95.00 a share in cash. The deal closed on 13 October 2023, 633 days later.

A merger or acquisition puts two companies under one owner. Microsoft's purchase took four steps: board approval, a shareholder vote, regulatory review and closing. Regulators in the UK, the European Union and the US reviewed it. The UK Competition and Markets Authority (CMA) blocked the original deal, then cleared a restructured one. The European Commission approved it on condition of 10-year licensing commitments. The US Federal Trade Commission (FTC) failed to stop it in court.

A merger joins two companies into one. An acquisition is one company buying another. A single deal can be both.

Microsoft's deal was both. Legally it was a merger. Microsoft formed a subsidiary called Anchorage Merger Sub, which merged into Activision. Activision survived as a wholly owned subsidiary of Microsoft.

Commercially it was an acquisition. Activision's shareholders received cash, while Microsoft took control.

Microsoft (Nasdaq: MSFT) was the buyer. Activision Blizzard, publisher of Call of Duty, Warcraft, Diablo, Overwatch and Candy Crush, was the target.

An acquisition of a listed company runs through four steps. The Microsoft deal took each of them.

First, the two boards agree terms. Both boards approved the deal. The companies signed the merger agreement on 18 January 2022. Each Activision share would convert into $95.00 in cash.

Second, the target's shareholders vote. The agreement needed a majority of Activision's outstanding shares.

On 28 April 2022, Activision shareholders voted. The yes votes covered 69.1% of all shares in issue at the record date. They were 98.2% of the votes cast.

Third, regulators review the deal. Closing required antitrust clearances without a "Burdensome Condition", a remedy with a material effect on Activision or on the benefits Microsoft expected.

Fourth, the deal closes. On 13 October 2023 each share converted into $95.00 and Activision's directors resigned.

The price was $95.00 a share. Activision's proxy statement, the document it sent shareholders before the vote, puts it 45.3% above the closing price on 14 January 2022, the last trading day before the announcement.

Two totals describe the price. They come from different documents. Microsoft's announcement valued the deal at $68.7 billion, "inclusive of Activision Blizzard's net cash". Net cash is cash less debt. Our guide to enterprise value explains how cash and debt change a company's price tag.

Microsoft's annual report (Form 10-K, the yearly filing a US-listed company makes to the Securities and Exchange Commission) shows a total purchase price of $75.4 billion. The sections below use $75.4 billion, the purchase price Microsoft recorded at closing.

Regulators ask whether a deal would reduce competition. In the US, Section 7 of the Clayton Act bars acquisitions whose effect "may be substantially to lessen competition".

Chart 1 counts the days from signing to each step of the reviews. It covers the FTC, the CMA and the European Commission, which decides European Union merger cases.

The CMA blocked the original deal on day 463. The deal closed on day 633, 170 days later.

Regulator and court decisions on Microsoft's acquisition of Activision Blizzard. Source: Competition and Markets Authority, European Commission, Federal Trade Commission and court records

The FTC's case covered US consoles, subscription services and cloud streaming.

The FTC treated it as a vertical deal, as the opinion of the Ninth Circuit (the US appeals court covering the western states) records. A vertical deal joins companies at different steps of supply, here a content producer and a company running gaming platforms. A horizontal deal joins direct rivals.

The European Commission and the CMA found a risk in cloud gaming, which streams games over the internet. The CMA provisionally found no risk in UK console gaming on 24 March 2023. The CMA blocked the original deal on 26 April 2023. The European Commission approved it on 15 May 2023, subject to 10-year licensing commitments.

Microsoft then changed the deal to answer the CMA. Activision's cloud streaming rights outside the European Economic Area (the European Union plus Iceland, Liechtenstein and Norway) went to Ubisoft, another game publisher. The CMA cleared the restructured deal on 13 October 2023.

The FTC's case ran in date order:

A reverse termination fee is money a buyer pays the target if the deal ends for specified reasons, such as an antitrust ban. Microsoft's fee started at $2.0 billion.

The fee rose in steps to $4.5 billion. It was $2.5 billion after 18 January 2023 and $3.0 billion after 18 April 2023. An amendment signed on 18 July 2023, a letter agreement between the two companies, set the last two steps: $3.5 billion after 29 August and $4.5 billion after 15 September.

Either side could walk away after an outside date, first set at 18 January 2023. Automatic extensions and the amendment moved it to 18 October 2023.

Accounting rules make the buyer split the purchase price across what it acquired. This is the purchase price allocation. The buyer records each asset and liability at fair value. The leftover is goodwill, the part of the price that no identifiable asset or liability explains.

Chart 3 gives Microsoft's final allocation, completed on 30 September 2024.

Goodwill was $51.0 billion, or 67.6% of the price. Intangible assets, which have no physical form, were $22.0 billion. Together they were 96.8% of the price. Cash was $13.0 billion, or 17.2%.

The shares add to more than 100% because Microsoft also took on liabilities. Assets acquired were $88.4 billion. Liabilities assumed were $13.0 billion. The difference is the $75.4 billion price.

We opened each document on 28 October 2026. Deal terms come from filings with the US Securities and Exchange Commission (SEC) by Activision and Microsoft. Purchase price figures come from Microsoft's annual report for fiscal 2025. Regulator dates come from the CMA, the European Commission, the FTC and the courts.

We count calendar days from 18 January 2022. Percentages are our arithmetic on the filed figures.

This covers one deal. It gives no view on whether the price was right. Our guide to what a DCF is shows how a buyer estimates what a target is worth.

Our Multi-model Signals cover Microsoft (MSFT).

A merger or acquisition runs from board approval to shareholder vote, regulatory review and closing. Microsoft's deal took 633 days. The fee for failure rose from $2.0 billion to $4.5 billion over that time.

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A merger combines two companies into one, while an acquisition is one company buying another. A deal can be both. Microsoft's purchase of Activision Blizzard was legally a merger, because a Microsoft subsidiary merged into Activision. It was commercially an acquisition, because Activision's shareholders received $95.00 a share in cash.

An acquisition premium is the amount a buyer pays above the target's share price before the announcement. Microsoft's $95.00 a share was a premium of 45.3% to Activision's closing price on 14 January 2022, the last trading day before the announcement, according to Activision's proxy statement.

A reverse termination fee is money a buyer pays the target if the deal ends for specified reasons, such as an antitrust ban. Microsoft's fee started at $2.0 billion. It rose to $4.5 billion for notice given after 15 September 2023.

The target's shareholders vote. Competition regulators also review the deal where the law requires it. Activision's shareholders approved on 28 April 2022. The UK, European Union and US reviews followed. The deal closed on 13 October 2023 after the CMA cleared a restructured version.

Goodwill is the part of the purchase price left after the buyer values the target's identifiable assets and liabilities. Microsoft recorded $51.0 billion of goodwill on Activision Blizzard, which is 67.6% of its $75.4 billion purchase price. Intangible assets of $22.0 billion made up most of the rest.

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