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According to Activision's latest SEC filing, Microsoft will face a massive breakup fee of up to $3 billion in the event of their failure to acquire Activision. The Part 1, Item 1 section of the filing document termed 'Business' clearly states the amount the tech giants are liable for upon termination of the deal.
Activision's acquisition by Microsoft is currently awaiting the approval of regulatory bodies.
Microsoft, a leading technology company, announced its intention to acquire Activision, one of the world's largest gaming companies, in a deal worth $68.7 billion. The proposed acquisition has sparked a great deal of controversy within the gaming industry and among consumers.
Proponents of the acquisition believe that it will lead to greater innovation and resources for game development, ultimately benefiting gamers. However, critics, including big players in the industry, argue that it will negatively impact competition and harm consumers.
Activision's SEC filings reveal a huge termination fee for Microsoft if the acquisition fails
Activision's most recent SEC (Securities and Exchange Commission) filing reveals intriguing details about their deal with Microsoft. According to the document, both parties are liable to pay each other huge termination fees. However, the Merger Agreement states that it is the tech giant who will be paying up more in case the deal doesn't go through or is blocked by the regulatory bodies.
The document states:
If the Merger Agreement is terminated under certain specified circumstances, we or Microsoft will be required to pay a termination fee. We will be required to pay Microsoft a termination fee of approximately $2.27 billion under specified circumstances, including termination of the Merger Agreement due to our material breach of representations, warranties, covenants or agreements in the Merger Agreement.
It further reads:
"Microsoft will be required to pay us a reverse termination fee under specified circumstances, including termination of the Merger Agreement due to a permanent injunction arising from Antitrust Laws (as defined in the Merger Agreement) when we are not then in material breach of any provision of the Merger Agreement and if certain other conditions are met, in an amount equal to (1) $2.5 billion if the termination notice is provided prior to April 18, 2023, or (2) $3.0 billion if the termination notice is provided at any time after April 18, 2023."
This clearly shows that in case the deal doesn't go through due to a breach of representations, warranties, or other agreements, as per the Merger Agreement, then Activision will have to pay MS a whopping $2.27 billion in breakup fee.
However, if MS breaches the Merger Agreement and Activision doesn’t, then the former will be liable to pay the latter company an amount of $2.5 billion if the termination notice is provided before April 18, 2023.
If they fail to provide it by April 18, 2023, they will be liable to pay a sum of $3 billion in termination fees.
This is all there is to know about the acquisition deal at the moment. It is highly controversial, and as it moves forward, debates will likely continue. Many industry experts and consumers will be closely monitoring the situation to see how it ultimately plays out.
