Microsoft stands to lose a lot of money if Activision Blizzard buyout fails

If Microsoft’s acquisition of Activision fails, Microsoft will suffer a significant financial loss due to the triggering of a million-dollar clause. So the company responsible for Xbox would be obliged to pay a huge amount if the acquisition is not completed.

British regulators recently revealed that Microsoft would pay a very high price for acquiring Activision even if it does not go through. After the British regulators blocked the acquisition, a $3 billion clause was disclosed.

According to the disclosed information, Microsoft would be obliged to pay that amount to its potential partners if the acquisition fails.

What will happen to Activision Blizzard if it does not complete the purchase by Microsoft?

In an interview with CNBC, Activision CEO Bobby Kotick was confident that the buyout would go ahead. Both parties involved in the purchase expect regulators to further study the acquisition and rule in their favor. Kotick also commented that the acquisition would increase competition in the market instead of increasing it.

On the other hand, in the interview, Kotick downplays the importance of the buyout clause, arguing that this figure would not change the company’s situation much. He states that by the end of the year, Activision Blizzard will have $18 billion in cash. In addition, Bobby Kotick comments that during its 30 years of existence, the company managed the shareholders’ capital very well.

It is important to point out that after the refusal of the purchase, Activision’s shares have suffered a significant fall from which they have been unable to recover.

During the interview, Bobby Kotick commented that the top priority of the two companies is to move forward with the purchase. However, he affirms that for the industry, from a competitive point of view, it is very positive.

At the same time, Kotick comments that regulators will notice that many high-paying jobs will be lost in large corporations. Furthermore, he assures that operating in the global industry is not an easy task; they can no longer reach consumers in Japan, and in the case of China, it is necessary to get a partner.

So Kotick assures that competition must start in already operating countries such as the United States and the United Kingdom.

Process of Activision’s purchase by Microsoft

Although the process of buying Microsoft may move forward, it is clear that the situation will not be resolved very soon. Moreover, both companies’ executives know the UK’s rejection may influence other nations.

In addition, the companies must prepare for an appeal to the British authorities, which may prolong the process for another year. However, the outcome is not certain.

In any case, the bills are on the table. If the transaction is completed, Microsoft must pay $69 billion; but if it fails, it must pay $3 billion.

Header: Activision Blizzard