Activision Blizzard to be Removed From Nasdaq-100 Index on Monday - News
by William D'Angelo , posted on 13 July 2023 / 5,103 Views
Nasdaq in a press release announced The Trade Desk will be joining the Nasdaq-100 Index and replacing Activision Blizzard, which will be removed from the Nasdaq-100 ESG Index. This will occur before the market opens on Monday, July 17.
Activision Blizzard being removed from the Nasdaq-100 Index could possibly suggest Microsoft is getting ready to close its acquisition of the gaming publisher.
Earlier this week, Microsoft won the hearing against the Federal Trade Commission (FTC) in the US as Judge Jacqueline Scott Corley denied the preliminary injunction the FTC was seeking. However, the FTC has since appealed the ruling.
Now that the FTC has filed its appeal it needs the Ninth Circuit Court of Appeals to issue an emergency stay to extend the current temporary restraining order, which will end on Friday, July 14 at 11:59 pm PT. It isn't known if the court will rule by the deadline and if they don't Microsoft could attempt to close the Activision Blizzard deal.
Microsoft’s vice chair and president Brad Smith on the appeal stated, "The District Court's ruling makes crystal clear that this acquisition is good for both competition and consumers. We're disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward."
If Microsoft were to close the deal it would be despite the Competition and Markets Authority (CMA) in the UK having blocked the deal in April. Microsoft and Activision Blizzard has appealed the decision as hearings were set to start on July 24. However, the CMA and Microsoft have decided to pause litigation to work out a new deal.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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UK is irrelevant
Sounds like the deal is definitely closing soon.
This step is pretty much only taken if a deal closure is imminent, and Idas (the UK M&A lawyer in Resetera) believes it’s possible Microsoft has reached some kind of understanding with the CMA or may close everywhere but the UK.
At a minimum it is looking more and more like ABK’s US and EU operations will be a Microsoft subsidiary sometime between early Friday morning and late Monday evening
Most likely the CMA will agree to grant an initial enforcement order which offers the possibility for companies to close mergers while a review is pending by promising to keep things separate in the meantime.
Is MS about to give the middle finger to the FTC and CMA?
They can close over the FTC on Monday unless FTC wins their next appeal before then. The CMA on the other hand is still an unknown. No one seems to know what's going on there. The CMA just said the current deal is still blocked but they are willing to review a new restructured deal which means this whole process starts over again. So who knows what's happening there.
Michael Pachter, who (whatever you think of his video game predictions) spent 20 years in mergers and acquisitions before becoming a game industry analyst, has said that in his experience what a company can do in a situation like this is create a separate division (ABK UK), wholly-owned by Microsoft at first but run independently. If a separately-run UK division doesn't satisfy the UK courts (the CMA's opinion on it doesn't matter if the courts are satisfied), then that division could be sold off if necessary, making some other company the licencee of ABK properties in the United Kingdom. Probably worth if it you're Microsoft and dead-set on owning ABK in the rest of the world. If they were forced to sell off ABK UK, they may have a chance to buy it back later if there's later a change in the law in the UK.
Well whatever Patcher thinks MS can do what they are currently doing is trying to submit a new deal to the CMA. So maybe MS will try that later but they aren't right now. CMA just said they need till like the end of August now. So the biggest question is will MS close anyway or will ABK pull out of the deal on the 18th instead of waiting? I've heard 3 billion is 2 years worth of revenue for ABK. Bobby point blank said he only agreed to this deal because of shareholders. If Bobby can pull out without approval from anyone else I don't see this going past the 19th.
There are indications that the new deal will be based on what Pachter predicted would be the resolution (some kind of divestiture).
ABK's Revenue is more in the $7.5-$8 billion each year. King alone brings in revenue of nearly $3 billion.
ABK has requested de-listing from the Nasdaq 100, effective Monday morning. That doesn't sound like a company that would prefer $3 billion in free money, that sounds like a company hell-bent on being acquired.
Bobby Kotick was not disagreeing with the acquisition, he was disagreeing with Microsoft's Day 1 Game Pass AAA release strategy. He's been all in favour of the acquisition all along, I haven't seen a single statement to the contrary. He owns a bunch of ABK stock so he stands to make millions of dollars in profit personally if Microsoft acquires ABK. So I think you may have conflated his comments about Game Pass and his comments about the acquisition, which are opposite of each other.
I continue to predict Microsoft and ABK will each do everything in their respective powers to make this happen, and I continue to predict it will go through in the end.
