The biggest takeover in video game history is still dragging on, repeatedly running into criticism and difficulties with international regulators. Now, a detail of the deal between Microsoft and Activision has come to light that could be very expensive for one side if it falls through.
What does Microsoft face if the acquisition fails?
Recently, the acquisition deal between Microsoft and Activision was hit hard when the Competition and Markets Authority (CMA) in the United Kingdom refused to give its approval. This was a major setback for the proposed acquisition, which Microsoft has been working on for over a year.
Meanwhile, Microsoft and Activision are fighting the decision. However, it is unclear whether the acquisition will actually be successful. If not, Microsoft will have to pay a “breakup fee” of three billion US dollars to Activision Blizzard. Such clauses in contracts are standard, especially in larger deals, to limit damage in the event of failure.
How Activision would use that money was explained by frequent (criticism CEO Bobby Kotick) in a recent (interview with CNBC):
“Our focus right now is to close the deal, which I think is in the best interest of the industry and the competition. If we don’t succeed in doing that, we will be sitting on about $18 billion of cash at the end of the year. I think if you look at our 30-year history, we have deployed capital very well for the benefit of our shareholders and will continue to do so. “
