The Federal Trade Commission (FTC) might file an antitrust lawsuit to block the $69 billion acquisition of gaming company Activision Blizzard (NASDAQ:ATVI) by Microsoft (NASDAQ:MSFT), as per a Politico report that cited people familiar with the matter. Activision stock fell 4% in Wednesday’s extended trading session in reaction to the news.
The report stated that a lawsuit opposing the deal is not guaranteed and that two sources said that four commissioners of the FTC have “yet to vote out a complaint or meet with lawyers for the companies.” Based on the FTC’s decision, the lawsuit could be filed as early as next month. The FTC is mainly concerned that the Activision acquisition would give Microsoft an unfair advantage in the video game market.
In a statement, Activision spokesperson Joe Christinat stated that the company would cooperate with regulators and fight to defend the deal if needed. The spokesperson also stated that allegations about the deal being anti-competitive were “completely absurd.”
Microsoft, the maker of the Xbox game console, announced the Activision deal in January this year. The deal is expected to help Microsoft fight competition from market leaders Tencent (TCEHY) and Sony (SNEJF). Mainly, Sony has raised concerns that Microsoft might make Activision’s popular games, like Call of Duty, exclusive to its Xbox platform. Earlier this month, the European Union opened a full-scale investigation to assess whether the proposed deal will significantly hurt competition in the gaming market.
ATVI Stock is Trading Below the Deal Price
Activision Blizzard stock has advanced 14.3% so far this year. Nonetheless, the stock is currently trading at a significant discount to Microsoft’s offer price of $95 per share as investors are concerned about the regulatory hurdles to the acquisition.
